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A good arbitration clause is short, clear and enforceable. A poor one can cost months of satellite litigation before the real dispute is even heard. PAD International Group drafts and reviews arbitration clauses for contracts connected with the UK, the UAE and Iran, so that the clause works in the countries where you may need to enforce an award.
What every arbitration clause should settle
| Element | Why it matters |
|---|---|
| Seat of arbitration | The seat fixes the law of the arbitration and which courts can support or challenge it. London, Dubai (DIFC or onshore) and other New York Convention seats each have different court supervision. |
| Arbitral rules and institution | Institutional rules (for example LCIA, ICC or DIAC) supply appointment, timetable and cost machinery. Ad hoc arbitration under the UNCITRAL Rules is possible but needs more care. |
| Law governing the arbitration agreement | Under the English Arbitration Act 2025, in force since 1 August 2025, the arbitration agreement is governed by the law of the seat unless the parties expressly agree otherwise. A choice of law for the main contract is not enough on its own. |
| Number and appointment of arbitrators | One arbitrator saves cost; three suit larger or more complex disputes. The clause should say who appoints and what happens if a party fails to. |
| Language | Choose the language of the proceedings expressly, especially where documents are in Persian or Arabic. |
| Scope | Use wide wording (“any dispute arising out of or in connection with this contract”) so that related claims are not left to the courts. |
Common drafting mistakes
- Pathological clauses: naming an institution that does not exist or has been abolished. For example, the DIFC-LCIA Arbitration Centre was abolished by Dubai Decree No. 34 of 2021 and its functions moved to the Dubai International Arbitration Centre (DIAC). Older contracts should be checked.
- Optional or split wording: “may refer to arbitration” or clauses that send some disputes to court and others to arbitration without a clear dividing line.
- Unworkable tiered steps: negotiation and mediation steps without time limits, which a party can use to delay or to argue that arbitration started too early.
- Ignoring enforcement: choosing a seat or institution without asking where the other side’s assets are and whether an award can be enforced there.
Contracts with an Iranian party
Iran is a party to the New York Convention, and its Law on International Commercial Arbitration (1997) allows international disputes to be arbitrated. Two points need particular care when drafting:
- State and public property: under Article 139 of the Iranian Constitution, referring disputes involving public or state property to arbitration requires approval of the Council of Ministers and notice to Parliament. Where the other party is foreign, Parliament must also approve. Contracts with state-owned entities must address this before signing.
- Nationality of arbitrators: Article 456 of the Iranian Code of Civil Procedure restricts an Iranian party from agreeing in advance to arbitrators of the same nationality as the foreign party. Its application to international arbitration is debated, so neutral wording on appointment is the safer course.
Model approach
We usually start from the model clause of the chosen institution and then adapt it to the deal: the seat, the governing law of the arbitration agreement, the number of arbitrators, the language and any expedited or emergency procedure. Each change is explained in plain English so that your commercial team understands what has been agreed.
How we help
- Drafting new arbitration clauses for commercial, shareholder, licensing and distribution agreements.
- Reviewing existing clauses before a dispute arises, including older clauses that name abolished centres.
- Advising on dispute-resolution strategy for contracts with Iranian, UAE and UK counterparties.
- Coordinating the clause with the wider commercial contract and contract drafting in Iran.
Need a clause drafted or checked before you sign? Ask a question or book a consultation, or return to our arbitration services.
General information only, current as of November 2026. It is not legal advice for a specific matter.