The Terms of Reference are a contractual instrument signed by the parties and the arbitrators after the arbitral tribunal is constituted. Its main objective is to define the dispute in a clear manner and to evidence the agreement of the parties in regard to procedural matters.
The Terms of Reference therefore designate
- the name and contact details of the parties and arbitrators;
- a summary of the claims;
- the substantive rules applicable to the dispute;
- the place of arbitration; and
- any agreement of the parties in regard to procedural rules.
The Terms of Reference may as well determine, at an early stage, the main issues to be solved by the arbitrators.
The signature of the Terms of Reference has two main consequences: first, it principally avoids that parties to an arbitration present new claims beyond what had been initially agreed without the authorization of the arbitrators. Second, it binds the arbitrators to solving all issues indicated therein and to sticking to the procedural rules chosen by the parties.
The Terms of Reference are not a feature of every single arbitration. While the arbitration rules of ICC make them mandatory for most procedures managed by the institution, Terms of Reference are implicitly allowed under other rules.
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