“Terms of Reference” is one of the important documents that should be
produced in some international arbitration. There are various views regarding
the question of whether the terms of reference is a new arbitration agreement or
is just a procedural requirement in the process of arbitration. However, it is a
separate document which differs from the arbitration agreement. Terms of
references is commonly known as a feature of arbitration Under International
Chamber of Commerce Rules of Arbitration and could also be seen in some
other arbitration rules. According to ICC Arbitration Rules, it is compulsory for
the parties and the arbitral tribunal to set the Terms of Reference, but under
some other arbitration rules, such as Japan Arbitration Association, it is
optional. Terms of references should be prepared and signed by the parties and
arbitrators as soon as the file is handed over to the arbitral tribunal. The main
function of this document is to determine the issues on which the arbitral
tribunal should concentrate during the arbitral proceeding. This paper examines
content and legal status of Terms of reference in commercial arbitration and
concludes that the Terms of References could, to a great extent, facilitate and
increase efficiency and accuracy in both institutional and ad hoc arbitration