Substantive/formal requirements
A written arbitration agreement need not be signed, nor is there a requirement for the agreement to be contained within a single document, meaning that an agreement to arbitrate can comprise an exchange of communications in writing (section 5(2), Arbitration Act). However, the documents must be clear enough to evidence that the parties intended to incorporate an agreement to arbitrate
Part 1 of the Arbitration Act (sections 1 to 84) governs arbitration agreements that are made or evidenced in writing (section 5, Arbitration Act). An arbitration agreement does not, however, necessarily need to be made in writing. Common law rules apply when determining the effect of an oral arbitration agreement, unless that oral agreement is by reference to terms that are in writing (section 5(3), Arbitration Act). Oral arbitration agreements can be problematic for the following reasons:
- Before an award is issued, any party can revoke the authority of an arbitrator, assuming it has not been validated by terms of reference (Lord v Lee [1868] LR 3 QB 404).
- If the authority of the arbitrator is revoked, the dispute can then be referred to court
- An award can only be enforced by commencing a full action in court, as opposed to the summary enforcement procedure provided under the Arbitration Act.
Separate arbitration agreement
Although arbitration agreements are typically included in the commercial contract to which they relate, it is possible for them to be set out in a separate document and incorporated into the commercial contract by reference (section 6(2), Arbitration Act).
Parties can incorporate an arbitration clause by reference to a standard form clause or to a set of trade terms. Such trade terms or standard form clause may in turn incorporate by reference external provisions requiring a dispute to be submitted to arbitration