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 was recently reinforced by Mr Justice Foxton in Aiteo Eastern E&P
