Contractual time limits to commence arbitration

Abstract

Arbitration and multi-tier dispute resolution clauses may contain a time limit to commence arbitration. The expiry of such a time limit could have different legal results. First, it could make the arbitration clause ineffective. Second, it could extinguish the claim or prevent its enforcement through legal proceedings. In the latter case, the contract provision about the time limit would have to be examined with regard to its compliance with mandatory provisions of the law applicable to limitation periods. Even the determination of the law applicable to limitation periods causes considerable difficulty. It is another difficult issue to determine which provisions of the law applicable to limitation periods are mandatory and, if so, whether the contract provision complies with the limits of the law. Once it is established that the contract provision is valid, the acts necessary to prevent the expiry of the time limit would have to be examined.