Jurisdiction of the Permanent Arbitration is based on a written arbitration agreement. Arbitration agreement is usually in the form of a clause in the contract arising out of or in connection to which dispute may arise. The Permanent Arbitration recommends stipulation of the following clause in the contracts:
"The parties agree that any dispute arising out of or in connection with the present contract shall be finally settled by arbitration organized in accordance with the Rules of the Permanent Arbitration at the Chamber of Commerce and Industry of Serbia.”
This clause of a "general" type contains all essential elements of the arbitration agreement, providing for jurisdiction of the Permanent Arbitration in a case of a dispute. It is applicable to all types of business relationships, whether international or domestic, irrespective of their complexity and other characteristics. Also, due to flexible nature of arbitration, the parties are given the opportunity to specify other details of arbitration which they may include in the arbitration clause:
- The place of arbitration shall be (insert city and state);
- Number of arbitrators shall be (specify one or three arbitrators);
- Language to be used in arbitral proceedings shall be (insert language);
- The applicable substantive law is (insert the applicable law).
The parties are free to agree on the jurisdiction of arbitration after the dispute has arisen by a subsequent arbitration agreement (arbitration compromise). A compromise usually occurs if the parties did not include an arbitration agreement in their contract, but agree to resolve the dispute by arbitration, and not before the court which would otherwise be competent.