The Validity of Arbitration Agreements: A Comparative Approach

1. Introduction

Arbitration is transforming and impacting our world today. It is one of the highest choice of alternative dispute resolution in international commerce, due to its flexibility, neutrality, confidentiality and enforcement. Under this arbitration platform, is the arbitration agreement—a contractual commitment by parties to resolve disputes through arbitration rather than litigation.

By committing to arbitration through an arbitration agreement, the parties have automatically submitted or agreed to resolve disputes that may arise between them, through arbitration, with the help of a third party, known as arbitrator; whose decision is binding on the parties.

1.1 What is an Arbitration Agreement?

An arbitration agreement is basically a written clause in a contract or attached to a contract, designed to settle any dispute that may arise between the parties in a contract, through a third party, known as arbitrator(s); whose decision is binding on the parties. It is an agreement designed to resolve disputes through a third party rather than traditional court litigation. These agreement specify how conflicts will be handled, who will serve as arbitrator(s), and what rules will govern the process.[i]

1.2 Four Key Elements of a Valid Arbitration Agreement

For an arbitration agreement to be enforceable, there are some major key elements that must be found, following the provisions of the UNCITRAL Model Law, the ICC Rules, the SIAC Rules and so on. They are;

1.     Consent and Legal Capacity of the parties in disputes. One of the biggest traps in drafting arbitration agreements is ensuring express consent from all parties. Courts will not enforce an agreement where one party didn’t voluntarily consent, as was demonstrated in Tiri v. L.A. Fitness International LLC (2014).[ii] The foundation of any arbitration agreement is the mutual consent of the parties, as well as their legal capacity as arbitration is contractual by nature.

2.     Written Form: Pursuant to article 7 of the UNCITRAL Model Law, an arbitration agreement must be in writing. The same goes with other laws regulating arbitration[3], such as the Article 4 of the International Arbitration Law and the Turkish Code of Civil Procedure[iii], requires that arbitration agreements be "in writing", and this includes incorporation by reference or electronic means, provided the parties’ intent is clear.

3.     Clarity and Certainty: the agreement must demonstrate a clear intention to arbitrate. It should specify the scope of the dispute; arbitration rules or administering institutions; the seat of arbitration; and the procedural and substantive laws that will guide the arbitration proceedings.

4.     Arbitrability: Arbitrability determines if a dispute is suitable for arbitration, based on legal and public policy considerations. It involves two main aspects:

(a) Subjective arbitrability (arbitrability ratione personae): Whether the parties involved have the capacity or legal authority to enter into arbitration (e.g., some states or public authorities may be excluded).

(b) Objective arbitrability (arbitrability ratione materiae): Whether the subject matter of the dispute is capable of settlement by arbitration under applicable law. Certain disputes, especially those involving public policy, criminal law, family law, or exclusive jurisdiction of courts, are often non-arbitrable.[iv]

1.3 A Comparative Perspective

How does different legal systems or jurisdictions determine the law that governs arbitration agreements, their form, validity and procedures? As the rate of resort to arbitration is increasing rapidly, it is crucially important to know the advent of arbitration in different jurisdictions. Different jurisdictions exhibit notable variations in how they treat arbitration agreements, reflecting differences in procedural rules, court supervision, arbitrator appointment, and enforcement mechanisms. Different jurisdictions adopt varying approaches to determine the law that governs the arbitration agreement itself.

In the United Kingdom (UK), the Arbitration Act 1996, as amended in 2025, adopts a pro arbitration approach. English courts consistently emphasize party autonomy and favor a liberal construction of arbitration clauses. The principle of separability—affirmed in Fiona Trust v. Privalov—ensures that an arbitration clause may remain valid even if the main contract is disputed or found void.

The law governing the validity of an arbitration agreement is usually the law expressly chosen by the parties. If not explicitly chosen, courts apply the law of the seat of arbitration (lex arbitri) or the curial law. Courts in many jurisdictions apply the New York Convention’s Article V(1)(a), under which the arbitration agreement’s validity must be judged by the law to which the parties subjected it or, failing that, the law of the country where the award was made.[v] In Germany, courts allow parties to challenge arbitration agreement validity before arbitration commences for stronger legal certainty, reflecting a supervisory role over arbitration jurisdiction.[vi] Moreover, in France, courts emphasize the tribunal’s initial competence, i.e. the principle of Kompetenz-Kompetenz, to determine validity to avoid delaying arbitration but courts intervene if the tribunal’s jurisdiction is clearly lacking. In the United States, the Federal Arbitration Act (FAA) provides a robust framework for enforcing arbitration agreements. U.S. courts favor arbitration through the application of doctrines such as competence-competence and severability. The presumption in favor of arbitration is strong, and agreements are generally upheld unless proven invalid under general contract law. Although, courts may give varying degrees of deference to arbitral tribunal decisions on jurisdiction, sometimes reviewing de novo, depending on the circumstances and party agreement.[vii]

1.4 CONCLUSION

It is pertinent to know that the UNCITRAL Model law serves as a harmonizing instrument, adopted in various forms by over 100 jurisdictions. It provides a baseline for determining the validity of arbitration agreements and promotes consistency in international arbitration. Article 7 provides a flexible approach to the writing requirement and the recognition of electronic communications reflect modern business practices. The legal landscape governing the validity of arbitration agreement is converging, especially in jurisdictions that have adopted the UNCITRAL Model law. However, parties must be mindful of jurisdiction-specific requirements when drafting their arbitration agreement.

[i] Icertis, ‘What is an Arbitration Agreement?’ (5 May 2025) <https://www.icertis.com/contracting-basics/what-is-an-abritration-agreement/> accessed 25 July 2025.

[ii] Anderson v Fitness International LLC (Cal Ct App, B258796, 27 October 2016) <https://law.justia.com/cases/california/court-of-appeal/2016/b258796.html> accessed 25 July 2025.

[iii] LawBhoomi, ‘Essentials of Arbitration Agreement’ (31 August 2023) <https://lawbhoomi.com/essentials-of-arbitration-agreement/> accessed 25 July 2025.

[iv] Aceris Law, ‘The Concept of Arbitrability in Arbitration’ (16 January 2019) <https://www.acerislaw.com/the-concept-of-arbitrability-in-arbitration> accessed 25 July 2025.

[v] Afe Babalola LLP, ‘The Validity of the Arbitration Agreement and Its Conditions’ (The Legal 500, 21 November 2023) <https://www.legal500.com/developments/thought-leadership/the-validity-of-the-arbitration-agreement-and-its-conditions> accessed 25 July 2025.

[vi] LCIA, ‘Arbitration Rules’ (2020) <https://www.lcia.org/media/Download.aspx?MediaId=178> accessed 25 July 2025.

[vii] W W Park, ‘Jurisdiction to Determine Jurisdiction’ (ICCA ) <https://cdn.arbitration-icca.org/s3fs public/document/media_document/media012409326410520jurisdiction_to_determine_jurisdiction_w_w_park.pdf> accessed 25 July 2025.

Anabuike Jeremiah Kosi. ACArb

Jeremiah Kosisochukwu Anabuike is a final-year law student at the University of Nigeria, Nsukka, with a strong passion for international arbitration and alternative dispute resolution (ADR). An Associate Member of the Nigerian Institute of Chartered Arbitrators, he has completed ADR training with both Nigerian and UK institutions. Jeremiah is the current President of the ADR Society UNEC and serves on the UNSBA Career Development Committee. His research and editorial work, combined with leadership roles and international certifications, reflect his dedication to legal scholarship and global engagement in arbitration.