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Unilateral option clauses to arbitrate

17 February 2023 / Masood Ahmed , Syed Naman Ali
Issue: 8013 / Categories: Features , Procedure & practice , Arbitration , ADR
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To arbitrate or to litigate? Masood Ahmed & Syed Ali explore the courts’ approach to unilateral option clauses both at home & abroad
  • The English courts have traditionally recognised and upheld unilateral option clauses (UOCs), including in the recent case of Aiteo v Shell.
  • However, careful thought should be given to the merits of including UOCs in contracts, because other jurisdictions have taken a more cautious approach.

A unilateral option clause (UOC), sometimes referred to as an asymmetric jurisdiction clause, provides one party or a group of parties (but not all the parties) the right to elect between arbitration or litigation to resolve a dispute, thereby providing flexibility to the parties to choose the most appropriate procedure to resolve their dispute. Indeed, the Court of Appeal in Etihad Airways PJSC v Flöther [2020] EWCA Civ 1707 recognised the commercial efficacy and widespread use of UOCs in international finance transactions.

The English courts have traditionally recognised and upheld UOCs in respect of London-seated arbitrations—an approach

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