Pathological clauses and how they fail
A pathological clause is one defective in a way that may make it unenforceable - through uncertainty, inconsistency, or inoperability. Common defects include permissive language (disputes may be referred to arbitration, leaving it optional), references to a non-existent institution or a misnamed body, a missing seat, and over-broad carve-outs that swallow the agreement to arbitrate.
Each of these can hand a reluctant counterparty an argument that there is no binding arbitration agreement at all - the worst possible outcome when a dispute arrives.
Use institutional model clauses
The simplest protection is to start from the chosen institution's current model clause and adopt it without modification unless there is a specific reason. The model clauses are drafted to be enforceable and to mesh with the institution's rules; the LCIA, ICC, SIAC, and HKIAC each publish one.
A workable backbone covers: any dispute arising out of or in connection with this contract (including questions about its existence, validity, or termination) referred to and finally resolved by arbitration under the named rules; the number of arbitrators; the seat; the language; and the governing law of the contract. After August 2025, add the law governing the arbitration agreement.
Multi-tier (escalation) clauses
Multi-tier clauses requiring negotiation or mediation before arbitration are enforceable if drafted with rigour. In Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd [2014] EWHC 2104 (Comm), an obligation to seek to resolve a dispute by friendly discussions for a defined period before arbitration was held to be an enforceable condition precedent.
To be enforceable, an escalation step needs a specified time limit, an identifiable standard, a complete process, and mandatory language. A vague agreement to negotiate in good faith without these features risks being unenforceable - and can stall a claim while the limitation clock runs.
Hybrid and option clauses
Hybrid clauses - letting one party choose between arbitration and litigation while binding the other - are valid under English law as an exercise of freedom of contract; Aiteo Eastern E&P Company Ltd v Shell Western Supply and Trading Ltd [2022] EWHC 2912 (Comm) upheld a unilateral option to arbitrate.
If you use one, draft the mechanics: how and when the option is exercised, any time limit, which disputes it covers, and whether fresh consent is needed to start arbitration. Loose option clauses generate satellite disputes about whether the option was validly exercised.
Interim-relief carve-outs
Parties often carve out interim relief from arbitration because courts can act faster, grant without-notice orders, and enforce by contempt. Section 44 of the Arbitration Act 1996 (as amended by the Arbitration Act 2025) lets the English court support arbitration with measures such as preserving evidence and assets and granting interim injunctions - but section 44(5) limits the court to acting where the tribunal or an emergency arbitrator cannot act effectively, and the 2025 amendments expressly bring emergency arbitrators into the framework.
Draft the carve-out narrowly: confine it to interim or provisional relief, state that seeking court relief does not waive the right to arbitrate the merits (use pending arbitration language), and identify the court. An over-broad carve-out - such as any action seeking injunctive relief, without limitation - can let an entire lawsuit proceed in court and defeat the arbitration.
Use at the desk
Practical checklist
- Use the chosen institution's current model clause; modify only with good reason.
- Avoid pathological defects - permissive wording, wrong or non-existent institution names, a missing seat.
- Cover scope, rules, seat, number of arbitrators, language, and governing law (and, post-August 2025, the arbitration agreement's law).
- Make any multi-tier step time-limited, mandatory, and complete (Emirates Trading v Prime Mineral [2014] EWHC 2104 (Comm)).
- If using a hybrid or option clause, draft how and when the option is exercised (Aiteo v Shell [2022] EWHC 2912 (Comm)).
- Draft interim-relief carve-outs narrowly - interim relief only, pending arbitration, named court (s.44 Arbitration Act 1996).
This guide is informational only and is not legal advice. It does not replace advice from licensed counsel on the facts of a specific transaction.
Product demo
Use the guide for context. Use Veqtor for the Word documents.
Watch Claude compare negotiation drafts and create a separate Word document with proposed tracked changes.
See Veqtor work with Word redlines