Have you ever heard of a “blank arbitration clause”?
On paper, it may seem harmless: the parties simply agree that “any disputes shall be resolved by arbitration.” The problem? It fails to specify how.
Unlike a full arbitration clause, which designates an arbitral institution and clearly defines the rules governing the dispute, a blank clause typically contains common gaps: it does not indicate the chosen arbitral institution, the method for appointing arbitrators, the applicable rules, the seat, or the language of the proceedings.
What is the real risk? Although a blank clause is binding and removes the jurisdiction of state courts over the merits of the dispute, it does not allow for the direct commencement of arbitration. As a result, the parties must jointly execute a submission agreement (terms of arbitration) to fill in the missing provisions.
But let’s be honest: it is rare for parties already immersed in a dispute to reach simple agreements, let alone define the technical details of the arbitration to which they will soon be subject. The outcome is a contradiction: you choose arbitration seeking efficiency, but may end up going to court just to formalize the arbitration agreement.
For this reason, it is always preferable to adopt a full arbitration clause. By referring to the rules of a reputable arbitral institution, you ensure that the proceedings can move forward even if the other party defaults or attempts to obstruct the process.
Arbitration should be the path to resolution, not the beginning of a new procedural dispute.
