Arbitration agreement

What is an arbitration agreement?

It is an agreement by which parties submit specified disputes to decision by arbitrators.

The agreement identifies the legal relationship or dispute covered and expresses the choice of arbitration. It may be a clause in a contract or a separate agreement.

It differs from the main contract, the arbitration rules and the award. The contract governs the parties’ relationship; the agreement provides for arbitration; the rules organise the proceedings; the award decides the dispute.

In Mozambique: Article 4 of Law 11/99 provides for the submission of all or some disputes by express agreement. Article 10 addresses form and identification of the subject matter.

How do an arbitration clause and a submission agreement differ?

An arbitration clause concerns future disputes; a submission agreement concerns a dispute that already exists.

The main distinction is when the dispute is identified. In an arbitration clause, parties anticipate possible disputes in a defined legal relationship. In a submission agreement, they already know the dispute and agree to refer it to arbitration.

Both are forms of arbitration agreement. An arbitration clause may also appear in a separate document: the distinction does not depend simply on whether it is inside the main contract.

In Mozambique: Article 4(2) expressly distinguishes the two forms. Article 10(4) requires a submission agreement to identify the existing dispute precisely and a clause to specify the legal relationship from which disputes may arise.

What form and validity requirements apply to the agreement?

Check the parties’ agreement, the required form, their ability to enter into it and whether the subject matter may be arbitrated.

A signature alone does not resolve every validity issue. Four aspects should be checked:

• Is there an agreement to arbitrate?

  Arbitration should be based on an agreement, not a unilateral choice after the dispute arises.

• Has the required form been met?

  Check the document, communications or incorporation by reference and what applicable law allows.

• Can the parties enter into the agreement?

  Confirm their capacity and, where there is representation, the authority of the person acting on another’s behalf.

• Is the subject matter arbitrable?

  Party agreement cannot permit arbitration of matters that the law excludes.

For international arbitration, also check the framework in the country where the agreement will be invoked or the award enforced. The 2006 Model Law offers two versions of Article 7; it does not automatically replace Mozambican law. Electronic communications must be assessed under the rules that actually apply.

In Mozambique: Article 10 requires writing and provides for the forms of documentation and incorporation by reference it describes. For standard-form contracts, where one party accepts terms previously set by the other, paragraph 5 requires that party to initiate arbitration or expressly agree to its institution. See also Articles 5, 6 and 15.

What should an arbitration clause contain?

The clause should make clear that the parties chose arbitration, which disputes it covers and how it will be organised.

The essentials are clarity about the intention to arbitrate and the disputes covered. Additional choices help proceedings work, but not all are validity requirements in every legal framework. Applicable law or rules may fill a gap.

When preparing a clause, organise the following choices:

• Disputes covered

  Identify the contract or legal relationship and the scope of the agreement.

• Institution and rules

  Choose institutional administration or ad hoc arbitration and identify coherent rules.

• Place of arbitration

  Define the legal seat and distinguish it from locations where hearings may take place.

• Arbitrators

  Consider their number and appointment procedure alongside the rules.

• Language

  Consider the documents, parties and translation costs.

• Applicable law

  Distinguish rules for deciding the dispute from rules organising the proceedings.

In Mozambique: Article 10(4) addresses identification of the subject matter; Articles 16–18, tribunal formation; Article 27, procedural rules and place; and Articles 34 and 54, applicable law. An institutional clause should correctly identify the institution and selected rules.

Consult the arbitration clause checklist

Does invalidity of the contract invalidate its arbitration clause?

Not automatically. The arbitration clause is legally separate from the contract containing it.

This principle is known as separability of the arbitration clause. It allows arbitrators to examine a dispute over the contract’s validity without the mere allegation of invalidity eliminating the agreement to arbitrate.

Separability does not make the clause immune to defects of its own. There may be grounds to question the existence or validity of the arbitration agreement itself. The issue affecting the contract must be distinguished from the issue affecting the agreement to arbitrate.

In Mozambique: Article 11 establishes separability and excludes automatic invalidity resulting from a void contract. Article 37 addresses the tribunal’s power to examine its own jurisdiction, including issues concerning the agreement, under the conditions it specifies.

What happens if a party refuses arbitration already agreed?

A party’s later refusal does not, by itself, eliminate a valid agreement covering the dispute.

The party commencing arbitration must follow the agreement, rules and applicable law. Resistance may require mechanisms for appointing arbitrators or forming the tribunal; it should not be confused with a lack of initial consent.

If a party brings a covered dispute before a court, the other party should invoke arbitration in the manner and within the time required. It should not assume that the court will refer the case to arbitration without that initiative.

In Mozambique: Article 12(2) provides for a request for referral to arbitration by the first submissions on the substance, subject to its stated qualifications. Article 13 governs waiver and provides that failing to raise the arbitration objection may constitute implied waiver. Articles 17 and 18 address tribunal formation and appointment.

How is the scope of disputes covered by the agreement determined?

Interpret the agreement, identify the legal relationship it covers and compare it with the claim being brought.

The wording matters. An agreement covering all disputes relating to the contract may be broader than one limited to calculating prices.

Also ask who is bound. Material scope concerns the issues the arbitrators may decide; personal scope concerns the persons covered by the agreement. Even a broad clause remains subject to legal limits and does not automatically extend to other contracts.

In Mozambique: Articles 4 and 10(4) guide identification of the dispute or legal relationship. Article 37 allows the tribunal to examine jurisdictional issues, including an allegation that a claim exceeds the agreement’s scope.

Who is bound by the agreement and what issues arise concerning third parties?

In principle, the parties that consented to arbitration are bound. Binding a third party requires a separate legal basis.

Being connected with the transaction, holding shares or belonging to the same corporate group is insufficient by itself. A person signing as a representative must also be distinguished from the person or company on whose behalf they sign.

Questions may arise concerning representation, assignment of rights, succession or participation of additional parties. The answer depends on applicable law, facts and, where relevant, the rules. Absence of a signature does not by itself resolve every such situation: consent or another legally recognised basis must be identified.

In Mozambique: Articles 4, 6 and 10 provide starting points for checking agreement, capacity and form. Law 11/99 should not be presented as automatically extending agreements to third parties: each situation requires analysis of its legal basis and applicable rules.