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Purpose

We spend considerable resources in writing contract terms that reflect our business interests. But, in case of dispute, will arbitrators give the contract effect according to its wording?

 

Not really and not always, according to a pilot study carried out by Prof. Giuditta Cordero-Moss (University of Oslo), Lucia Busso (Aston University), and Chiara Zanchi (Pavia University), in cooperation with: New York University (Prof. Franco Ferrari), Sciences Po Paris (prof Diego Fernandez Arroyo), University of Sao Paulo (Prof. Cristiano Zanetti) and National University of Singapore (Prof. Gary Bell).

 

The pilot study, completed in 2023, is briefly described in Kluwer Arbitration Blog, Pilot Empirical Project on Construction of Contracts in International Arbitration (https://arbitrationblog.kluwerarbitration.com/2023/08/01/pilot-empirical-project-on-construction-of-contracts-in-international-arbitration/).

 

The pilot study asked 32 experienced international arbitrators to solve three cases in which the outcome would differ according to how literally or purposively the contract would be read.

 

  • The majority of participants read the contract in the light of the applicable law (53%).

  • A minority considered the contract to be self-sufficient (26%) or subject to the transnational law (21%);

  • Within each approach, the outcome is not consistent: considering the contract to be self-sufficient leads to both literal (64%) and purposive construction (36%), and so does the transnational approach, although to a lesser extent (respectively, 9% and 91%).

 

The pilot project will be followed by a main study, in which 150 experienced arbitrators will be asked to answer a questionnaire based on 10 contract clauses.

 

The questionnaire is based on panel discussions to which experienced contract drafters participated in the framework of workshops organised in Oslo, Rome, New York, Paris, Vienna, Sao Paolo, London, and Singapore.

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