An arbitration clause specifies how disputes arising to any contract are to be settled. It may not necessarily state a specific jurisdiction as such. It compulsorily specifies only a dispute settlement method that is as being not through the courts but through an arbitrator.
Arbitration is a form of alternative dispute resolution in which all parties to a dispute submit their issues to an arbitrator who decides on the basis of the facts in accordance with the law. It is considered a faster and less expensive mode of settlement
Mandatory arbitration means that all parties to an understanding are required by law or agreement to use binding arbitration to settle any dispute. Mandatory clauses in agreements with companies set out the right to choose the arbitrator and set the arbitration rules.
This is a method for settling disputes arising from international understandings or contracts. The practise of international has evolved to meet the dispute settlement needs of parties from different countries without needing to resort to their various legal systems.