|Help

Ambiguity in 'Arising' Phrases: Caution for Drafters of Intended Narrow Arbitration Clauses - Chapter 9 - AAA Handbook on Commercial Arbitration - 2nd Edition

Author(s): 
Barry H. Garfinkel
James D. Fry
Page Count: 
10 pages
Media Description: 
PDF from "AAA Handbook on Commercial Arbitration - 2nd Edition"
Published: 
September, 2010
Jurisdictions: 
United States
Practice Areas: 
Standard and Model Arbitration Clauses
Author Detail: 

Barry H. Garfinkel is of counsel to Skadden, Arps, Slate, Meagher & Flom LLP and heads the firm's international arbitration group.

James D. Fry is an Assistant Professor of Law at the University of Hong Kong.

 

PDF157.82 KB

$40.00
Description: 
I. Introduction
A lawyer who wishes to draft a narrow arbitration clause should beware of relying too heavily on the term “arising.” Usage of this term in arbitration agreements has proven problematic for even the most seasoned practitioners. More than 100 disputes have centered around the construction of “arising,” suggesting that the term is vague and judicial interpretations are relatively unpredictable.
Indeed, as the Second Circuit observed in Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trade Inc., “No fixed rules govern the determination of an arbitration clause’s scope; while very expansive language will generally suggest a broad arbitration clause…we have also found broad clauses when examining phrasing slightly more limited....”1 Thus, there are no absolute rules on how to draft a narrow clause, if such is intended.
Nonetheless, some guidance can be derived from the case law. It is well-established that the arbitrability of a dispute is determined on a case-by-case basis. The court will look to the language of the arbitration clause to determine whether the parties intended for all, or only some, of the disputes at issue to be arbitrable. Therefore, parties and their counsel must carefully consider the wording of the clause at the time they enter into their agreement, or else run the risk of incurring an unintended result.