This paper aims at understanding the underlying policies behind the inclusion of an arbitration clause in a carriage of goods contract. The inclusion of an arbitration clause helps to prevent to a large extent, the existence of a long pending dispute with regards to jurisdiction but the problem of having the upper hand in determining the applicable arbitration law still exists since various arbitration laws exist side by side, One can say that arbitration is a consensual dispute method and an arbitration clause is commonly placed in contract to eliminate the threat of court action in the event of disputes. Such a clause normally outlines the terms of arbitration and binds the parties to the final decision. An arbitration agreement/clause does not stand on its own; it arises out of existing relationship between parties. This simply means that the parties must have agreed prior to the dispute in a written form or otherwise, that any dispute that arises from this existing relationship be settled by arbitration. A lot of times international trade cannot function without carriage of goods by sea. This is so because, no other means of transport would effectively transport goods proficiently at also very reasonable charges.In the contract of carriage of goods by sea there is an inherent struggle which arises between the interests of the carrier more or less known as the ship owner and the shipper also known as the cargo owner, this inherent struggle between the various interests always expected, what both parties should be concerned about is the effective performance of contract by both parties involved.This paper explores the need for an inclusion of an Arbitration clause as a necessity instead of a choice, because by the inclusion of the clause, parties are allowed to choose beforehand the Laws that govern their transaction. This will help resolve business dispute in definite and enforceable manner.