Commercial parties, when entering into a contractual relationship, will have to address three key issues when negotiating the dispute resolution (or jurisdiction) clause. First, whether to resolve those disputes by arbitration, a private dispute resolution procedure, or litigation, a public procedure before the national courts. Second, if arbitration is preferred, where to conduct (or “seat”) that arbitration and third, which set of procedural rules, if any, to adopt.

For many years, a significant proportion of contracting parties have chosen arbitration over litigation based on a number of factors: the arbitration may be conducted confidentially in a neutral venue rather than publicly in the state of either contracting party; the parties can select a tribunal that is familiar with their industry sector and the course of dealing within that sector; and a procedural timetable can be agreed that provides a clear way forward to the hearing and the award, enabling the parties to budget for the time and cost of resolving their dispute. Grounds for appeal are often limited and the Award itself can be enforced directly in more than 150 countries through the New York Arbitration Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 .