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GUIDELINE

Guideline for Drafting Specimen Arbitration Clause in Building Contract:

A well-drafted arbitration clause in a building contract is essential for resolving disputes efficiently. Here's a concise guide for drafting such a clause:

Title and Identification: Clearly title the clause as "Arbitration Clause" and specify its application to the building contract. Include the names of the parties, effective date, and project details.

Agreement to Arbitrate: Clearly state the parties' agreement to resolve any disputes arising out of or in connection with the building contract through arbitration.

Arbitral Tribunal: Specify the number of arbitrators and the process for their appointment. If parties are unsure, provide a default mechanism, such as appointment by a designated arbitration institution.

Governing Law: Clearly identify the governing law that will apply to the arbitration proceedings, ensuring consistency with the overall building contract.

Arbitration Rules: Reference established arbitration rules (e.g., from institutions like ICC, SIAC) or, if preferred, outline specific procedures for the arbitration.

Common Mistakes to Avoid:

Vague Language: Use clear and unambiguous language to avoid confusion about the intent and scope of the arbitration clause.

Incomplete Details: Ensure the clause includes all relevant details, such as the number of arbitrators, their qualifications, and the governing law, to prevent disputes over interpretation.

Failure to Specify Arbitration Institution: If relying on institutional rules, clearly state the chosen institution to avoid uncertainty in the arbitration process.

Ignoring Jurisdictional Issues: Clearly identify the seat or location of arbitration to avoid jurisdictional challenges and confusion.

Neglecting Signature: Ensure that representatives of both parties sign the building contract, confirming their agreement to the included arbitration clause.

By adhering to these guidelines and avoiding common mistakes, a well-drafted Specimen Arbitration Clause in a Building Contract provides a structured framework for resolving disputes, promoting efficiency and fairness in the construction industry. This clause is commonly used in construction agreements to facilitate an alternative dispute resolution mechanism.

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