ISDA MODEL CLAUSE FOR DIS RULES (Frankfurt/Main Seat)
This arbitration clause is intended for use where:
- The underlying agreement is a 2002 ISDA Master Agreement (see footnotes for suggested amendments for use with a 1992 ISDA Master Agreement)
- The institutional rules are the DIS Rules
- The seat of arbitration is Frankfurt/Main
- The underlying agreement is governed by English law or New York law
- The law governing the arbitration clause is German law
Where not all of the above conditions are met, this clause may require adaptation.
The following clause is primarily designed for use with a 2002 ISDA Master Agreement. Section 13 of the 1992 ISDA Master Agreement equals Section 13 of the 2002 ISDA Master Agreement in the parts relevant to the amendments made by this model clause. However, Section 14 of the 1992 ISDA Master Agreement does not define the term “Proceedings”; please note, therefore, the alternative wording suggested for insertion in Part 5 of the Schedule where using the 1992 ISDA Master Agreement.
The following provisions should be included in Part 4 of the Schedule. The Governing Law clause provides for English or New York law to govern the ISDA Master Agreement (a choice of one or the other should be made). The arbitration clause, however, is governed by German law.1 The next clause replaces the Jurisdiction clause (Section 13(b)) of the ISDA Master Agreement. In sub-clause (iii), include one of Options 1, 2 or 3. The following provisions amend the Process Agent and Waiver of Immunity clauses (Sections 13(c) and (d)) to reflect the choice of arbitration, rather than court jurisdiction.
( ) Governing Law. This Agreement (excluding Section 13(b) (Arbitration) which shall be governed by German law) and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance [with English law/New York law (excluding conflict of laws principles)].2
( ) Section 13(b) shall be deleted in its entirety and replaced with the following:
(i) Any dispute, claim, difference or controversy arising out of, relating to or having any connection with this Agreement, including any dispute as to its existence, validity, interpretation, performance, breach or termination or the consequences of its nullity and any dispute relating to any non-contractual obligations arising out of or in connection with it (a “Dispute”), shall be referred to and finally resolved by arbitration.
(ii) The arbitration shall be conducted in accordance with the Arbitration Rules of the German Institution of Arbitration (the "DIS"; the “Rules”). Capitalised terms used in this Section which are not otherwise defined in this Agreement have the meaning given to them in the Rules.
(iii) [Option 1: The arbitral tribunal shall consist of one arbitrator, who shall be appointed in accordance with the Rules.3]
[Option 2: The arbitral tribunal shall consist of three arbitrators. The members of the arbitral tribunal shall be appointed in accordance with the Rules.4]
[Option 3: The arbitral tribunal shall consist of three arbitrators. The members of the arbitral tribunal shall be appointed in accordance with the Rules, save that the president of the arbitral tribunal shall be nominated by the DIS Appointing Committee.5]
(iv) The seat or legal place of arbitration shall be Frankfurt/Main, Germany.6
(v) The language used in the arbitral proceedings shall be English.7
( ) Section 13(c) of the Agreement is hereby amended by deleting the word “Proceedings” in the first sentence of that Section and replacing it with the words “suit, action or proceedings before the German courts relating to the arbitration clause set out in Section 13(b) above or any arbitration proceedings contemplated thereby or any arbitral award obtained pursuant to such arbitration proceedings”.8
( ) Section 13(d) of the Agreement is hereby amended:
(a) after the words “jurisdiction of any court” in the third line by adding the words “or arbitral tribunal”;
(b) after the word “judgment” in Sub-Sections (iv) and (v) in the fifth line by adding the words “or arbitral award”; and
(c) by deleting the words “Proceedings in the courts of any jurisdiction” in the sixth line and replacing them with “suit, action or proceedings relating to any Dispute in the courts of any jurisdiction or before any arbitral tribunal (“Proceedings”)”.
The following provisions should be included in Part 5 of the Schedule. These provisions make necessary amendments to other provisions of the ISDA Master Agreement to make them reflect the choice of arbitration.
(a) Section 8(b) shall be amended so that each reference in it to “judgment or order” shall be changed to refer to “judgment, arbitral award or order” and the words “or arbitral tribunal” shall be added after the words “another court”.
(b) Section 8(c) shall be amended by adding the words “or arbitral award” after the word “judgment”.
(c) Section 9(h) shall be amended by adding the words “or arbitral award” after the words “before as well as after judgment” each time they appear.9
(d) Section 14 of the Agreement shall be amended by:
(i) adding the following definition of “Dispute”: ““Dispute” has the meaning specified in Section 13(b)(i).”; and
(ii) in the definition of “Proceedings”, deleting the words “Section 13(b)” and replacing them with the words “Section 13(d)””.10
1 German arbitration law does not contain specific provisions concerning the law governing the arbitration agreement. It is common understanding that the law of the seat, i.e. German law if the place of arbitration is in Frankfurt/Main, applies unless the parties agreed otherwise. In order to avoid ambiguities, it is nevertheless recommended to expressly agree on the law governing the arbitration clause.
2 Amend as necessary.
3 Pursuant to section 3 of the DIS Rules the arbitral tribunal by default consists of three members. The parties may, however, agree on a sole arbitrator. Section 14 of the DIS Rules provides that where the arbitral tribunal is to consist of a sole arbitrator and the parties do not reach agreement on a sole arbitrator within 30 days after receipt of the statement of claim by the respondent, each party may request nomination of a sole arbitrator by the DIS Appointing Committee.
4 Where the arbitral tribunal consists of three arbitrators, sections 6 and 12 of the DIS Rules provide that the claimant shall appoint one arbitrator with the statement of claim whilst the respondent shall appoint one arbitrator within 30 days after receipt of the statement of claim. If the DIS Secretariat does not receive a nomination from the respondent within 30 days after receipt of the statement of claim by the respondent, the claimant may request nomination by the DIS Appointing Committee. The 30 day time-limit may be extended upon request. The two arbitrators nominate the chairman of the arbitral tribunal. If the DIS Secretariat does not receive a nomination of the chairman of the arbitral tribunal from the two arbitrators within 30 days after calling upon them to do so, each party may request nomination of the chairman by the DIS Appointing Committee.
5 This is a deviation from section 12.2 DIS Rules which provides for a nomination of the chairman by the two party appointed arbitrators.
6 If the parties have not agreed on the place of arbitration, it shall be determined by the arbitral tribunal, section 21.1 DIS Rules. Choosing Frankfurt am Main as the seat of the arbitral tribunal has the advantage that - to the extent that recourse to the state courts in support of the arbitration or after the issuing of an award is sought - the parties will find a specialized senate at the Higher Regional Court (Oberlandesgericht) Frankfurt am Main.
7 If the parties have not agreed on the language of the proceedings, the arbitral tribunal shall determine the language or languages to be used in the proceedings, section 22.1 DIS-Rules.
8 Note that, in the event it is necessary to seek interim measures from a court before a tribunal is constituted, it is useful if a process agent has been appointed. The process agent should be an individual or an entity in Germany. However, a process agent is not necessary for the purposes of the arbitration proceedings themselves.
9 If using the 1992 ISDA Master Agreement, use the following provision instead of (c): (c) Section 2(e) shall be amended by adding the words “or arbitral award” after the words “before as well as after judgment”.
10 If using the 1992 ISDA Master Agreement, use the following provision instead of (d)(ii): (d)(ii) adding the following definition of “Proceedings”: ““Proceedings” has the meaning specified in Section 13(d)”.