What is an arbitration clause?

Question

José Manuel Alburquerque · Accepted Answer

It is an agreement, usually part of a contract, by which the parties undertake to have their disputes resolved by one or more arbitrators instead of by the courts. The law calls it an arbitration agreement (“convenio arbitral”) and requires it to be in writing. The arbitrator's decision, which is called an arbitral award (“laudo”), is binding like a final judgment. If one party sues in court despite the clause, the other can ask the judge to leave the matter to the arbitrators, but must do so at the outset, within the first ten days of the period for filing a defence. If it does not, the case continues in court. What it is and what it requires With this clause, the parties undertake to submit to arbitration the disputes that have arisen or may arise between them in connection with a specific relationship, for example a contract. It can be included in the contract itself or in a separate document. These are its main rules: It must be in writing. A document signed by both parties will do, as will an exchange of letters, emails or other communications that leave a record of the agreement. It can only cover matters that the parties are free to dispose of, such as the performance of a contract or the payment of a debt. Parentage or divorce, for example, are excluded. The nullity of the rest of the contract does not in itself invalidate the clause, because the law treats it as a separate agreement. So if what is in dispute is the validity of the contract, it is in principle for the arbitrators to decide. The clause should state how many arbitrators there will be, the place of arbitration, the language and whether the arbitration will be organised by an arbitral institution, which is a body that administers arbitrations and helps to appoint the arbitrators. If it does not say how many, a sole arbitrator decides. If someone goes to court despite the clause The clause prevents the courts from resolving the dispute, but only if the party that benefits from it raises the point. The judge will not raise it on his or her own initiative. If you are sued in court and want the matter to go to arbitration, you must raise this in a document called a “declinatoria” (a challenge to the court's jurisdiction) within the first ten days of the period for filing your defence. If the judge agrees with you, he or she declines to hear the case and the parties must go to arbitration. If you let that period pass, you are in practice waiving arbitration for that dispute and the case continues in court. If you are the one who wants to sue in court despite the clause, you can do so, but you run the risk that the other party will challenge the court's jurisdiction and that you will have to start again before the arbitrators. In addition, the law generally requires an attempt to reach an agreement before suing. What you can ask the judge for, even if there is a clause, are interim measures, which serve to ensure that whatever is decided can actually be complied with, such as a precautionary attachment of assets. You can request them before or during the arbitration. If you are a consumer If you signed the contract with a business as a consumer, an arbitration clause you accepted before the dispute arose is not binding on you and you can go to court. For the business, on the other hand, the clause counts as acceptance of consumer arbitration, which is free of charge, should you prefer to request it.