Arbitration clause

An arbitration clause is a contractual agreement by which the parties establish the jurisdiction of an arbitration court to decide disputes arising from the contract. Through an arbitration clause, the parties submit to the decision of a private arbitration tribunal instead of the state courts. Arbitration clauses are widely used in many areas of commercial law, particularly in the IT and media industry.

Legal basis:

1. sections 1025 et seq. ZPO: Sections 1025-1066 ZPO regulate arbitration law in Germany. They contain provisions on the arbitration agreement, the composition of the arbitral tribunal, the proceedings and the enforcement of arbitral awards.

2 New York Convention: The 1958 UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) facilitates the international enforcement of arbitral awards.

3. institutional arbitration rules: Many arbitration proceedings are conducted in accordance with the rules of institutional arbitration tribunals such as the ICC, DIS or LCIA.

Advantages of arbitration proceedings:

1. flexibility: arbitration proceedings can be adapted to the needs of the parties, e.g. with regard to the applicable law, the language of the proceedings or the venue.

2. expertise: The parties can select arbitrators with specific expertise in the subject matter of the dispute.

3. confidentiality: Arbitration proceedings take place in camera, which can be advantageous, especially in the case of sensitive business secrets.

4. speed: arbitration proceedings can often be concluded more quickly than state court proceedings.

5 International enforceability: Arbitral awards are more easily enforceable than state court judgments in many countries due to the New York Convention.

Disadvantages and risks:

1. costs: Arbitration proceedings can be more expensive than state court proceedings, especially in the case of high amounts in dispute, as the parties have to bear the costs of the arbitration tribunal.

2. lack of instances: Arbitration awards are generally final and can only be challenged within very narrow limits. There is no possibility of appeal.

3. lack of coercive powers: Arbitral tribunals have no coercive powers and are dependent on the support of state courts, e.g. in the gathering of evidence or enforcement.

4. risk of partisanship: If a party is repeatedly involved in arbitration proceedings, there is a risk that arbitrators may unconsciously act in a partisan manner so as not to jeopardize future appointments.

Design aspects:

1. arbitration institution: It should be regulated whether ad hoc arbitration proceedings or institutional arbitration proceedings (e.g. according to the rules of the ICC or DIS) are to be conducted.

2. place of arbitration: The seat of the arbitral tribunal should be determined, as this determines the applicable procedural law.

3. number of arbitrators: It should be stipulated whether the arbitration tribunal is to be composed of one or more arbitrators.

4. qualification of the arbitrators: Certain requirements may be placed on the qualification of the arbitrators, e.g. with regard to their technical expertise or language skills.

(5) Applicable law: The substantive law applicable to the dispute should be determined.

6 Language of the proceedings: The language of the arbitration proceedings should be specified.

7 Confidentiality: Rules on the confidentiality of the procedure and the non-disclosure of business secrets should be established.

Special features in the IT and media industry:

1. complexity: Disputes in the IT and media industry are often technically complex and require specific expertise, which speaks in favor of arbitration proceedings.

2. international matters: IT and media projects often have an international dimension, so that the facilitated enforceability of arbitral awards is an important advantage.

3. confidentiality: The protection of trade secrets and intellectual property is of great importance in the industry, so the confidentiality of arbitration proceedings is an important asset.

4. fast pace: Given the rapid pace of technological development, the speed of arbitration proceedings can be crucial.

Strategic considerations:

1. cost-benefit analysis: Companies should carefully consider whether the benefits of arbitration (flexibility, expertise, confidentiality) justify the potentially higher costs.

2. choice of arbitration institution: The choice of a reputable arbitration institution can increase the quality and acceptance of the arbitral award.

3. place of arbitration: The place of arbitration should be chosen carefully, taking into account legal certainty, enforceability and practical considerations.

4. selection of arbitrators: The selection of qualified and independent arbitrators is crucial for the fairness and acceptance of the proceedings.

5 Relationship to other dispute resolution mechanisms: Arbitration clauses can be combined with other mechanisms such as mediation or conciliation clauses.

Conclusion:

Arbitration clauses are an important instrument for alternative dispute resolution in the IT and media industry. They offer numerous advantages over state court proceedings, particularly in terms of flexibility, expertise, confidentiality and international enforceability. However, they also entail risks and potentially higher costs.

The decision for or against an arbitration clause depends on the specific circumstances of the contract and the business relationship. It requires careful consideration of the advantages and disadvantages as well as precise contract drafting. Companies should not only consider the legal implications, but also the strategic and economic implications.

Overall, arbitration clauses remain an indispensable element of contract drafting in the IT and media industry, particularly in an international context. However, their effective use requires a thorough analysis of the individual case and expert advice.