Derivatives Disputes: ISDA revises Arbitration Guide, expanding the model arbitration clauses

The International Swaps and Derivatives Association (ISDA) has revised its Guide to Arbitration (the Guide).  First published in 2013, after considerable stakeholder consultation, the Guide includes an explanatory memorandum which provides an overview of arbitration for parties to derivatives transactions, and includes a broad choice of model arbitration clauses (and guidance notes) for use with both the ISDA 1992 Master Agreement and the ISDA 2002 Master Agreement.  The model clauses can be included in new Master Agreements or can be included when amending an ISDA Master Agreement.

The new version of the Guide is best described as an enhancement, rather than a wholesale revision.  It reflects developments in the field of arbitration since the Guide was first launched in 2013, such as the increasing availability of emergency arbitration, and the possibility of early dismissal of claims and defences.  The Guide also now features model arbitration clauses for various additional institutions, including the German Arbitration Institute (DIS) Rules clause to which Herbert Smith Freehills contributed (see here for further information).

As discussed below, arbitration offers a number of procedural features which may be attractive to parties to derivative transactions.  Further, there are certain considerations relevant in derivatives disputes in particular which the parties may wish to bear in mind when including an arbitration clause in their contractual documents.

As the International Chamber of Commerce (ICC) confirmed in a report on Financial Institutions and International Arbitration, arbitration has been steadily growing as a chosen method of dispute resolution in derivatives contracts, particularly as the participants entering the market of traded derivatives become more diverse (see here for further information).  ISDA’s continued support for arbitration is likely to encourage parties in the derivatives market to consider arbitration for their transactions and to facilitate the inclusion of workable arbitration clauses in ISDA Master Agreements and related contracts.

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Video Post in “Observations on Arbitration” series: what to expect from the first procedural conference

In this short video, partner Chris Parker considers what to expect at the first procedural conference in an arbitration.  Chris outlines the matters which may be discussed and decided, and how the tribunal may approach these issues as well as outlining the ways in which in-house counsel can both prepare for the conference and the arbitration which is to follow.

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