Resolving Accountable Care Organization Disputes: What ... · Providence, RI as a trial lawyer and healthcare lawyer, and was a founding and managing partner of Partridge Snow & Hahn

Resolving Accountable Care Organization Disputes: What Lawyers Need to Know

May 10, 2016 – 2:00 pm – 3:30 pm ET

PROGRAM SUMMARY

Speakers: Katherine Benesch and James Purcell Accountable Care Organizations (ACOs) are a fact of medical practice and will remain a central delivery mechanism for healthcare in the future. Galvanized by Affordable Care Act, the numbers and sizes of ACOs are growing. They will generate myriad disputes that require resolution quickly, less expensively, confidentially, expertly, and as amicably as possible given the ongoing business and professional relationships involved.

AGENDA 2:00 p.m. Welcome and Introduction of Speakers (5 minutes) 2:05 p.m. Accountable Care Organizations (75 minutes)

• What ACOs Are and Will Become • The Types of Disputes That ACOs Will Present • Mediation and Facilitation of ACO Disputes: Why ADR is Indispensible • Arbitration of ACO Disputes: Considerations and Observations

3:20 p.m. Conclusion and Questions (10 minutes) 3:30 p.m. Evaluation (5 minutes) 3:35 p.m. Adjourn

Copyright 2016 American Arbitration Association

Katherine Benesch, Esquire Benesch & Associates, LLC 100 Overlook Center Suite 200 Princeton, New Jersey 08540 Phone: +1 (609) 375-2603 Fax: +1 (800) 434-8219 Email: [email protected]

KATHERINE BENESCH has been active in alternate dispute resolution for over twenty years and has served as an arbitrator, mediator, referee and special master in numerous complex commercial and healthcare cases. Ms. Benesch serves on the Commercial Panel of Arbitrators, the Panel of Mediators, the Large Complex Case Panel and the National Healthcare Panel of the American Arbitration Association (AAA), and has served as an arbitrator for the International Centre for Dispute Resolution (ICDR). Ms. Benesch is a member of the American Health Lawyers Association (AHLA) Dispute Resolvers panel, and has served at the request of the President of AHLA as a member of its 5-person ADR Service Review Board. As an arbitrator and mediator she has handled cases involving nationwide, regional and local managed care and risk-sharing contracts, international clinical trials, Medicare, Medicaid and managed care reimbursement, hospital/physician relationships, physician practice group disputes, general complex commercial matters, music licensing, shareholder disputes and issues arising under and related to the Affordable Care Act. She serves as Chair of the Healthcare and Life Sciences Committee of the International Institute for Conflict Prevention and Resolution (CPR), and has served as a member of the AAA Healthcare Advisory Council. Ms. Benesch also serves on the CPR BioTech Distinguished Panel of Neutrals, as well as the CPR Employment, Healthcare and Life Sciences Panels. She has been certified to serve on the Panel of Mediators of the United States District Court for the District of New Jersey, elected to membership in the National Academy of Distinguished Neutrals and the NJ Academy of Mediators and Arbitrators, and selected as a Mediator/Arbitrator in the Sandy Voluntary Alternative Dispute Resolution programs administered by Kenneth Feinberg and by the United States District Court.

Ms. Benesch’s ADR experience includes work as an arbitrator for the Manville Personal Injury Settlement Trust, a Special Master for the Court of Common Pleas of Allegheny County, PA, a referee deciding Dalkon Shield cases in a program of the Private Adjudication Center at Duke University, a mediator for U.S. Arbitration and Mediation and as an arbitrator and mediator for the Lawyers Dispute Resolution Program of the New Jersey State Bar Association. Ms. Benesch was appointed by the Supreme Court of New Jersey to serve as Chair of the state’s District VII Fee Arbitration Panel, by the Court of Common Pleas of Allegheny County to a Special Committee on Medical Malpractice ADR, and has designed procedures for mediation of disputes between hospitals, medical staffs and physicians. She is trained as a Peer Review Hearing Officer (AHLA), and has arbitrated and mediated disputes throughout the U.S. She was the sole arbitrator in the successful resolution of a $200,000,000 case, and has served as a mediator and an arbitrator in cases that concluded in the settlement of $25M and a $50M lawsuits. Ms. Benesch also has addressed a group through the ICDR in Buenos Aires, Argentina on alternate dispute resolution, and has taught retired judges about managed care contracting.

Ms. Benesch was a partner in the Princeton, New Jersey office of Duane Morris, LLP from 2001 to 2011, and returned to her own practice when the firm closed its Princeton office. She is admitted to practice in federal and state trial and appellate courts in Pennsylvania, New Jersey, the District of Columbia and the United States Supreme Court. In addition, she is admitted to the United States District Courts for the Northern and Southern Districts of New York, and has handled matters before state and federal courts in New York, Maryland and other jurisdictions. Ms. Benesch has served as Chairman of the Health and Hospital Law Section of the New Jersey State Bar Association, President of the Princeton Bar Association, Chair of the Princeton Regional Health Commission, Governor of the American Bar Association Health Law Section and is a Fellow in the American Bar Foundation. She has served as an Adjunct Assistant Professor at the University of Pittsburgh School of Medicine and the Robert Wood Johnson Medical School, and on the Technical Review Board of the Princeton Journal of Bioethics. She was named as one of twelve Outstanding Hospital Attorneys in the U.S. for 2004, has been elected a Super Lawyer by her peers since 2005, and is listed as one of New Jersey’s Top Rated Lawyers. She has an AV Preeminent Peer Review Rating with Martindale Hubbell.

Ms. Benesch is a graduate of Duquesne University School of Law, Yale University School of Medicine (M.P.H.) and Wheaton College.

mailto:[email protected]

James E. Purcell Jim graduated from Cornell University in 1967, served in the Army as an Infantry Airborne Pathfinder officer in Viet Nam in the 101st Airborne Division, and after discharge, got his law degree from Boston University Law School in 1974 magna cum laude. He practiced law in Providence, RI as a trial lawyer and healthcare lawyer, and was a founding and managing partner of Partridge Snow & Hahn until 2000, when he became Chief Operating Officer of Blue Cross & Blue Shield of RI (BCBSRI). In 2004, he became President and CEO of BCBSRI until he retired from that position at the end of 2011. He served as a member and Chair of a number of Boards of Directors in RI and elsewhere. Jim and his wife Kelly moved from RI to Hyannis, MA. Today, Jim is an independent arbitrator and mediator, specializing in resolution of healthcare and other complex business disputes, and serves on the Boards of Cape Abilities and HopeHealth on Cape Cod, Massachusetts. He also consults for healthcare delivery systems and businesses regarding strategic transformation.

www.adr.org

Drafting Dispute Resolution Clauses

A p r A c t i c A l G u i d e

Amended and effective September 1, 2007

This booklet is intended to assist parties in drafting alternative dispute resolution (ADR) clauses. With that in mind, and in addition to the suggested clauses, the committee compiled a checklist of considerations for the drafter, as well as examples of supplemental language which go beyond the basic clauses. Users will benefit from the commentary throughout the text which helps to identify points of interest. Parties with questions regarding drafting an AAA clause should contact their local AAA office. Offices are listed on the AAA’s website, www.adr.org.

Table of Contents

Introduction 3

I. AChecklistfortheDrafter 4

II. MajorFeaturesofArbitration 5

AWrittenAgreementtoResolveDisputes bytheUseofImpartialArbitration 5

InformalProcedures 6

ImpartialandKnowledgeableNeutrals toServeasArbitrators 6

FinalandBindingAwards thatareEnforceableinaCourt 6

III. ClausesApprovedbytheAAA forGeneralCommercialUse 7

Arbitration 7

Negotiation 10

Mediation 11

Large,ComplexCases 11

IV. ClausesforUseinSpecificContexts 13

A. ClausesforUseinInternationalDisputes 13

B. ClausesforUseinConstructionDisputes 16

C. ClausesforUseinEmploymentDisputes 18

D. ClausesforUseinPatentDisputes 20

V. OtherProvisionsThatMightBeConsidered 22

A. SpecifyingaMethodofSelection andtheNumberofArbitrators 23

B. ArbitratorQualifications 25

C. LocaleProvisions 26

D. Language 26

E. GoverningLaw 27

F. ConditionsPrecedenttoArbitration 27

G. PreliminaryRelief 28

H.Consolidation 29

I. DocumentDiscovery 30

J. Depositions 31

K. DurationofArbitrationProceeding 32

L. Remedies 32

M.“Baseball”Arbitration 33

N. ArbitrationWithinMonetaryLimits 34

O. AssessmentofAttorneys’Fees 35

P. ReasonedOpinion AccompanyingtheAward 36

Q. Confidentiality 36

R. Appeal 37

S. Mediation-Arbitration 38

T. StatuteofLimitations 38

U. DisputeResolutionBoards 39

V. MassTorts 39

Conclusion 40

Introduction

Everyyear,millionsofbusinesscontractsprovideformediationandarbitrationaswaysofresolvingdisputes.AlargenumberofthesecontractsprovideforadministrationbytheAmericanArbitrationAssociation(AAA),apublic-service,not-for-profitorganizationofferingabroadrangeofconflictmanagementprocedures.AAAservicesareavailablethroughofficeslocatedinmajorcitiesthroughouttheUnitedStatesandDublin,Ireland,aswellasthrougharrangementswithotherinstitutionsworldwide.Hearingsmaybeheldatlocationsconvenientfortheparties.Inaddition,theAAAprovideseducationandtraining,producesspecializedpublicationsandconductsresearchonout-of-courtdisputesettlement.

Typically,theparties’agreementtomediateorarbitrateiscontainedinafuture-disputesclauseintheircontract;theclausemayprovidethatanydisagreementwillberesolvedunderthemediationorarbitra-tionrulesoftheAmericanArbitrationAssociation.

TheAmericanArbitrationAssociationisknownforthehighqualityofitspanelsofmediatorsandarbitrators,includingaLarge,ComplexCasePanel.AspecialAAAinternationalcenter,theInternationalCentreforDisputeResolutionSM,administerscasesaroundtheglobeandanywhereintheU.S.

Thefirstsectionofthisbookletcontainsabriefchecklistofsomeofthemoreimportantelementsapractitionershouldkeepinmindwhendraftingoradoptinganydisputeresolutionclause,nomatterhowbasic.Thesecondsectiondescribesthemajorfeaturesofarbitration,andthethirdsectionprovidesaseriesofclausesthattheAAAfeelsareappropriateforuseinageneralcommercialsettingandwhichmeetdifferentneedsandconcernsinsuchacontext.ThefourthsectioncontainsaseriesofclausesthattheAAAdeemsappropriateforuseintheparticularcontextsofinternationaldisputes,constructiondisputes,employmentdisputes,andpatentdisputes.ThefinalsectionconsistsofexamplesofsupplementallanguagewhichgobeyondthebasicdisputeresolutionclausesinSectionsIIIandIV.WhiletheAAA

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Drafting Dispute Resolution Clauses – A Practical Guide

doesnotnecessarilyrecommendsuchexpandedprovisions,itrecog-nizesthatsuchadditionsareusedfromtimetotimetomeetspecificwishesorneedsoftheparties.Explanatorytextsetsforthfactorsonemighttakeintoaccountwhenconsideringwhethertoincludesuchsupplementallanguage.

I. A Checklist for the Drafter

Itisnotenoughtostatethat“disputesarisingundertheagreementshallbesettledbyarbitration.”Whilethatlanguageindicatestheparties’intentiontoarbitrateandmayauthorizeacourttoenforcetheclause,itleavesmanyissuesunresolved.Issuessuchaswhen,where,howandbeforewhomadisputewillbearbitratedaresubjecttodisagreementonceacontroversyhasarisen,withnowaytoresolvethemexcepttogotocourt.

Someofthemoreimportantelementsapractitionershouldkeepinmindwhendrafting,adoptingorrecommendingadisputeresolutionclausefollow.

> Theclausemightcoveralldisputesthatmayarise,oronlycertaintypes.

> Itcouldspecifyonlyarbitration–whichyieldsabindingdecision–oralsoprovideanopportunityfornon-bindingnegotiationormediation.

> Thearbitrationclauseshouldbesignedbyasmanypotentialpartiestoafuturedisputeaspossible.

> Tobefullyeffective,“entryofjudgment”languageindomesticcasesisimportant.

> Itisnormallyagoodideatostatewhetherapanelofoneorthreearbitrator(s)istobeselected,andtoincludetheplacewherethearbitrationwilloccur.

> Ifthecontractincludesageneralchoiceoflawclause,itmaygovernthearbitrationproceeding.Theconsequencesshouldbeconsidered.


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> ConsiderationshouldbegiventoincorporatingtheAAA’sProceduresforLarge,ComplexCommercialDisputesforpotentiallysubstantialorcomplicatedcases.

> ThedraftershouldkeepinmindthattheAAAhasspecializedrulesforarbitrationintheconstruction,patent,securitiesandcertainotherfields.Ifanticipateddisputesfallintoanyoftheseareas,thespecializedrulesshouldbeconsideredforincorporationinthearbitrationclause.AnexperiencedAAAadministrativestaffmanagestheprocessingofcasesunderAAArules.

> Thepartiesarefreetocustomizeandrefinethebasicarbitrationprocedurestomeettheirparticularneeds.IfthepartiesagreeonaprocedurethatconflictswithotherwiseapplicableAAArules,theAAAwillalmostalwaysrespectthewishesoftheparties.

II. Major Features of Arbitration

Arbitrationisaprivate,informalprocessbywhichallpartiesagree,inwriting,tosubmittheirdisputestooneormoreimpartialpersonsauthorizedtoresolvethecontroversybyrenderingafinalandbindingaward.Itisusedforawidevarietyofdisputes–fromcommercialdisagreementsinvolvingconstruction,securitiestransactions,computersorrealestate(tonamejustafew),toinsuranceclaimsandlabor-uniongrievances.Whenanagreementtoarbitrateisincludedinacontract,itmightexpeditepeacefulsettlementwithoutthenecessityofgoingtoarbitrationatall.Thus,anarbitrationclauseisaformofinsuranceagainstlossofgoodwill.

Themajorfeaturesofarbitrationare:

1. AWrittenAgreementtoResolveDisputesbytheUseofImpartialArbitration.Suchaprovisionmaybeinsertedinacontractforresolutionoffuturedisputesormaybeanagreementtosubmittoarbitrationanexistingdispute.

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2. InformalProcedures.UndertheAAArules,theprocedureisrelativelysimple:courtroomrulesofevidencearenotstrictlyapplicable;thereusuallyisnomotionpracticeorformaldiscovery;andthereisnorequirementfortranscriptsoftheproceedingsorforwrittenopinionsofthearbitrators.Thoughtheremaybenoformaldiscovery,theAAA’svariouscommercialrulesallowthearbitratortorequireproductionofrelevantinformationanddocuments.TheAAA’srulesareflexibleandmaybevariedbymutualagreementoftheparties.

3. ImpartialandKnowledgeableNeutralstoServeasArbitrators.Arbitratorsareselectedforspecificcasesbecauseoftheirknowledgeofthesubjectmatter.Basedonthatexperience,arbitratorscanrenderanawardgroundedonthoughtfulandinformedanalysis.

4. FinalandBindingAwardsthatareEnforceableinaCourt.Courtinterventionandreviewislimitedbyapplicablestateorfederalarbitrationlawsandawardenforcementisfacilitatedbythosesamelaws.

Duringitsmanyyearsofexistence,theAAAhasrefineditsstandardarbitrationclause.Thatclause,whenlinkedtoAAAcasemanagement,offersthepartiesasimple,time-testedmeansofresolvingdisputes.Occasionally,partiesortheircounseldesireadditionalprovisions.Thisbooklethasbeenpreparedasageneralguidefordraftingdisputeresolutionclauses.ItcontainsexamplesofclausesandportionsofclausesthathavebeenusedbypartiesincasesfiledwiththeAAA.ReadersshouldfeelfreetocontacttheirlocalAAAofficeforfurtherinformation.


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III. Clauses Approved By the AAA for General Commercial Use

ThestandardarbitrationclausesuggestedbytheAmericanArbitrationAssociationaddressesmanybasicdraftingquestionsbyincorporatingAAArules.Thissimpleapproachhasprovenhighlyeffectiveinhundredsofthousandsofdisputes.Additionallanguage,whichpartiesmaywishtoaddinspecificcontexts,isdiscussedinSectionIVofthisbooklet.

ThestandardarbitrationclausealsomayincludereferencetotheAAA’sOptionalRulesforEmergencyMeasuresofProtection(beforeanarbitratorisselected)andforexpeditedarbitration.

Ifthepartieswish,standardclausesalsomaybeusedfornegotiationandmediation.Therearealsostandardclausesforuseinlarge,complexcases.

Arbitration

Thepartiescanprovideforarbitrationoffuturedisputesbyinsertingthefollowingclauseintotheircontracts(thelanguageinthebracketssuggestspossiblealternativesoradditions).

STD1 Anycontroversyorclaimarisingoutoforrelatingtothiscontract,orthebreachthereof,shallbesettledbyarbitrationadministeredbytheAmericanArbitrationAssociationinaccordancewithitsCommercial[orother]ArbitrationRules[includingtheOptionalRulesforEmergencyMeasuresofProtection],andjudgmentontheawardrenderedbythearbitrator(s)maybeenteredinanycourthavingjurisdictionthereof.

Arbitrationofexistingdisputesmaybeaccomplishedbyuseofthefollowing.

STD2 We,theundersignedparties,herebyagreetosubmittoarbitrationadministeredbytheAmericanArbitrationAssociationunderitsCommercial[orother]ArbitrationRulesthefollowingcontroversy:[describebriefly].Wefurtheragreethatajudgmentofanycourthavingjurisdictionmaybeenteredupontheaward.

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Theprecedingclauses,whichrefertothetime-testedrulesoftheAAA,haveconsistentlyreceivedjudicialsupport.Thestandardclauseisoftenthebesttoincludeinacontract.ByinvokingtheAAA’srules,suchaclausemeetsthefollowingrequirementsofaneffectivearbitrationclause:

> Itmakesclearthatalldisputesarearbitrable.Thus,itminimizesdilatorycourtactionstoavoidthearbitrationprocess.

> Itisself-enforcing.Arbitrationcancontinuedespiteanobjectionfromaparty,unlesstheproceedingsarestayedbycourtorderorbyagreementoftheparties.

> Itprovidesacompletesetofrulesandprocedures.Thiseliminatestheneedtospelloutdozensofproceduralmattersintheparties’agreement.

> Itprovidesfortheselectionofaspecialized,impartialpanel.Arbitratorsareselectedbythepartiesfromascreenedandtrainedpoolofavailableexperts.UndertheAAArules,aprocedureisavailabletodisqualifyanarbitratorforbias.

> Itsettlesdisputesoverthelocaleofproceedings.Whenthepar-tiesdisagree,localedeterminationsaremadebytheAAAastheadministrator,precludingtheneedforinterventionbyacourt.

> Itmakespossibleadministrativeconferences.IftheclauseincorporatestheAAAcommercial,constructionindustryorrelat-edarbitrationrules,anadministrativeconferencewiththeparties’representativesandAAAcasemanagementtoexpeditethearbitrationproceedingsisavailablewhenappropriate.

> Itmakesavailablepreliminaryhearings.IftheclauseprovidesforAAArules,apreliminaryhearingcanbearrangedincommercialcasesofanysizetospecifytheissuestoberesolved,clarifyclaimsandcounterclaims,provideforapre-hearingexchangeofinformation,andconsiderothermattersthatwillexpeditethearbitrationproceedings.

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> Italsomakesmediationavailable.IftheclauseprovidesforanyoftheAAA’svariouscommercialarbitrationrules,mediationconferencescanbearrangedtofacilitateavoluntarysettlement,withoutadditionaladministrativecosttotheparties.

> Itestablishestimelimitstoensurepromptresolutionforalldis-putes.AnadditionalfeatureofthevariousAAArulesisaspecialexpeditedprocedure,whichmaybeusedtoresolvesmallerclaimsandotherdisputesthatneedmorespeedyresolutions.

> ItprovidesforAAAadministrativeassistancetothearbitratorandtheparties.Toprotectneutralityandavoidunilateralcon-tact,mostrulesprovidefortheAAAtochannelcommunicationsbetweenthepartiesandthearbitrator.AnAAAcasemanagermayalsoprovideguidancetohelpensurepromptconclusionofapro-ceeding.

> Itestablishesaprocedureforservingnotices.Dependingontherulesusedandthetypeofthecase,noticesmaybeservedbyregularmail,addressedtothepartyoritsrepresentativeatthelastknownaddress.Undertherules,theAAAandthepartiesmayusefacsimiletransmissionorotherwrittenformsofelectroniccommunicationtogivethenoticesrequiredbytherules.

> Unlessotherwiseprovided,itgivesthearbitratorthepowertodecidemattersequitablyandtofashionappropriaterelief.TheAAAcommercialrulesallowthearbitratortograntanyremedyorreliefthatthearbitratordeemsjustandequitableandwithinthescopeoftheagreementoftheparties,includingspecificperformance.

> Itallowsexpartehearings.Ahearingmaybeheldintheabsenceofapartywhohasbeengivenduenotice.Thus,apartycannotavoidanawardbyrefusingtoappear.

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> Itprovidesforenforcementoftheaward.Theawardcanbeenforcedinanycourthavingjurisdiction,withonlylimitedstatu-torygroundsforresistingtheaward.If,inadomestictransaction,asdistinguishedfromaninternationalone,thepartiesdesirethatthearbitrationclausebefinal,bindingandenforceable,itisessentialthattheclausecontainan“entryofjudgment”provisionsuchasthatfoundinthestandardarbitrationclause(“andjudgmentontheawardrenderedbythearbitratormaybeenteredinanycourthavingjurisdictionthereof”).

Negotiation

Thepartiesmaywishtoattempttoresolvetheirdisputesthroughnegotiationpriortoarbitration.Asampleofaclausewhichprovidesfornegotiationfollows.

NEG1 Intheeventofanydispute,claim,question,ordisagreementarisingfromorrelatingtothisagreementorthebreachthereof,thepartiesheretoshallusetheirbesteffortstosettlethedispute,claim,question,ordisagreement.Tothiseffect,theyshallconsultandnegotiatewitheachotheringoodfaithand,recognizingtheirmutualinterests,attempttoreachajustandequitablesolutionsatisfactorytobothparties.Iftheydonotreachsuchsolutionwithinaperiodof60days,then,uponnoticebyeitherpartytotheother,alldisputes,claims,questions,ordifferencesshallbefinallysettledbyarbitrationadministeredbytheAmericanArbitrationAssociationinaccordancewiththeprovisionsofitsCommercialArbitrationRules.


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Mediation

Thepartiesmaywishtoattemptmediationbeforesubmittingtheirdisputetoarbitration.Thiscanbeaccomplishedbymakingreferencetomediation(whichmaybeterminatedatanytimebyeitherparty)inthearbitrationclause.

MED1 Ifadisputearisesoutoforrelatestothiscontract,orthebreachthereof,andifthedisputecannotbesettledthroughnegotiation,thepartiesagreefirsttotryingoodfaithtosettlethedisputebymediationadministeredbytheAmericanArbitrationAssociationunderitsCommercialMediationProceduresbeforeresortingtoarbitration,litigation,orsomeotherdisputeresolutionprocedure.

MED2 Thepartiesherebysubmitthefollowingdisputetomedia-tionadministeredbytheAmericanArbitrationAssociationunderitsCommercialMediationProcedures[theclausemayalsoprovideforthequalificationsofthemediator(s),themethodforallocatingfeesandexpenses,thelocaleofmeetings,timelimits,oranyotheritemofconcerntotheparties].

AnAAAadministratorcanassistthepartiesregardingselectionofthemediator,scheduling,pre-mediationinformationexchangeandattendanceofappropriatepartiesatthemediationconference.

Itisprudenttoincludetimelimitsonstepspriortoarbitration.Underabroadarbitrationclause,thequestionofwhetheraclaimhasbeenassertedwithinanapplicabletimelimitisgenerallyregardedasanarbitrableissue,suitableforresolutionbythearbitrator.

Large,ComplexCases

Thelarge,complexcaseframeworkofferedbytheAAAisdesignedprimarilyforbusinessdisputesinvolvingclaimsofatleast$500,000,althoughpartiesarefreetoprovideforuseoftheLCCRulesinotherdisputes.Thekeyelementsoftheprogramare(1)selectionofarbitratorswhosatisfyrigorouscriteriatoinsurethatthepanelisanextremelyselectone;(2)training,orientation,andcoordination

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ofthosearbitratorsinamannerdesignedtofacilitatetheprogram;(3)establishmentofproceduresforadministrationofthosecasesthatelecttobeincludedintheprogram;(4)flexibilityofthoseproceduressothatpartiescanmorespeedilyandefficientlyresolvetheirdisputes;and(5)administrationoflarge,complexcasesbyspeciallytrained,experiencedAAAstaff.

TheproceduresprovideforanearlyadministrativeconferencewiththeAAA,andapreliminaryhearingwiththearbitrators.Documentaryexchangesandotheressentialexchangesofinformationarefacilitated.Theproceduresalsoprovidethatastatementofreasonsmayaccom-panytheaward,ifrequestedbytheparties.Theproceduresaremeanttosupplementtheapplicablerulesthatthepartieshaveagreedtouse.Theyincludethepossibilityoftheuseofmediationtoresolvesomeorallissuesatanearlystage.

Thepartiescanprovideforfutureapplicationoftheproceduresbyincludingthefollowingarbitrationclauseintheircontract.

LCCP1 AnycontroversyorclaimarisingfromorrelatingtothiscontractorthebreachthereofshallbesettledbyarbitrationadministeredbytheAmericanArbitrationAssociationunderits[applicable]ProceduresforLarge,ComplexCommercialDisputes,andjudgmentontheawardrenderedbythearbitrator(s)maybeenteredinanycourthavingjurisdictionthereof.

ApendingdisputecanbereferredtotheprogrambythecompletionofaSubmissiontoDisputeResolutionformiftheunderlyingcontractdocumentsdonotprovideforAAAadministration.

LCCP2 We,theundersignedparties,herebyagreetosubmittoarbitrationadministeredbytheAmericanArbitrationAssociationunderits[applicable]ProceduresforLarge,ComplexCommercialDisputesthefollowingcontroversy[describebriefly].Judgmentofanycourthavingjurisdictionmaybeenteredontheaward.


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IV. Clauses for Use in Specific Contexts

Thefollowingclauses,whichalsocanprovideforperiodsofnegotia-tionand/ormediationpriortoarbitration,maybeconsideredforuseinspecificcontexts.ThechecklistofconsiderationsinSectionIabovealsoshouldbeconsulted.

A.ClausesforUseinInternationalDisputes

TheInternationalCentreforDisputeResolution(ICDR),theinternationaldivisionoftheAmericanArbitrationAssociation,administersinternationalcommercialcasesundervariousarbitra-tionrulesworldwide.TheICDRadministerscasesunderitsownInternationalDisputeResolutionProcedures,variousAAArules,theCommercialArbitrationandMediationCenterfortheAmericas(CAMCA)Rules,theRulesoftheInter-AmericanCommercialArbitrationCommission(IACAC)andtheUNCITRALArbitrationRules.UnderArticle1oftheInternationalArbitrationRules,partiesmaydesignateeithertheICDRortheAAAinthearbitrationclauseforthepurposesofnaminganadministrativeagencyandconferringproperjurisdictiontotheICDRortheAAA.Followingaresamplesofarbitrationclausespertinenttointernationaldisputes.

INTL1 Anycontroversyorclaimarisingoutoforrelatingtothiscontractshallbedeterminedbyarbitrationinaccor-dancewiththeInternationalArbitrationRulesoftheInternationalCentreforDisputeResolution.

INTL2 Anydispute,controversy,orclaimarisingoutoforrelatingtothiscontract,orthebreachthereof,shallbefinallysettledbyarbitrationadministeredbytheCommercialArbitrationandMediationCenterfortheAmericasinaccordancewithitsrules,andjudgmentontheawardrenderedbythearbitrator(s)maybeenteredinanycourthavingjurisdictionthereof.

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INTL3 Anydispute,controversy,orclaimarisingfromorrelatingtothiscontract,orthebreach,termination,orinvaliditythereof,shallbesettledbyarbitrationinaccordancewiththeRulesofProcedureoftheInter-AmericanCommercialArbitrationCommissionineffectonthedateofthisagreement.

INTL4 Anydispute,controversy,orclaimarisingoutoforrelatingtothiscontract,orthebreach,termination,orinvaliditythereof,shallbesettledbyarbitrationundertheUNCITRALArbitrationRulesineffectonthedateofthiscontract.TheappointingauthorityshallbetheInternationalCentreforDisputeResolution.ThecaseshallbeadministeredbytheInternationalCentreforDisputeResolutionunderitsProceduresforCasesundertheUNCITRALArbitrationRules.

Thepartiesshouldconsideraddingarequirementregardingthenumberofarbitratorsappointedtothedisputeanddesignatingtheplaceandlanguageofthearbitration.ThepartiesmayalsosubmitaninternationaldisputeundertheAAA’scommercialandotherspecializedarbitrationrules.Thoseproceduresdonotsupersedeanyprovisionoftheapplicablerulesbutmerelycodifyvariousprocedurescustomarilyusedininternationalarbitration.Includedamongthemareprovisionsspecifyingtheneutralityofarbitrators,consecutivehearingdays,thelanguageofhearings,andopinions.Thethrustoftheproceduresistoexpediteinternationalproceedingsandkeepthemaseconomicalaspossible.

Forstrategicorlongtermcommercialcontracts,thepartiesmaywishtoprovidea“step”disputeresolutionprocessencouragingnegotiatedsolutions,ormediationinadvanceofarbitrationorlitigation.Amodelstepclauseandmediationclausefollow.


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INTL5 Intheeventofanycontroversyorclaimarisingoutoforrelatingtothiscontract,thepartiesheretoshallconsultandnegotiatewitheachotherand,recognizingtheirmutualinterests,attempttoreachasolutionsatisfactorytobothparties.Iftheydonotreachsettlementwithinaperiodof60days,theneitherpartymay,bynoticetotheotherpartyandtheInternationalCentreforDisputeResolution,demandmediationundertheInternationalMediationProceduresoftheInternationalCentreforDisputeResolution.Ifsettlementisnotreachedwithin60daysafterserviceofawrittendemandformediation,anyunresolvedcontroversyorclaimarisingoutoforrelatingtothiscon-tractshallbesettledbyarbitrationinaccordancewiththeInternationalArbitrationRulesoftheInternationalCentreforDisputeResolution.

INTL6 Intheeventofanycontroversyorclaimarisingoutoforrelatingtothiscontract,thepartiesheretoagreefirsttotryandsettlethedisputebymediationadministeredbytheInternationalCentreforDisputeResolutionunderitsrulesbeforeresortingtoarbitration,litigation,orsomeotherdisputeresolutiontechnique.

Usually,theeffectivemanagementoftimeandexpenseinarbitrationisbestleftinthehandsofexperiencedcasemanagersandarbitrators.Occasionally,however,partieswishtoensurethatmattersareresolvedinaminimumoftimeandwithoutrecoursetotheexpenseandtimenecessitatedbycommonlawmethodsofpre-hearinginformationexchange.Theclausesthatfollowlimitthetimeframeofarbitration(clausespresentedinthealternative)andtheamountofpre-hearinginformationexchangeavailabletotheparties.Onewordofcaution:onceenteredinto,theseclauseswilllimitthearbitrator’sauthoritytomoldtheprocesstothespecificdictatesofthecase.

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INTL7 Theawardshallberenderedwithinninemonthsofthecommencementofthearbitration,unlesssuchtimelimitisextendedbythearbitrator.

Alternative

ItistheintentofthePartiesthat,barringextraordinarycircumstances,arbitrationproceedingswillbeconcludedwithin60daysfromthedatethearbitrator(s)areappointed.Thearbitraltribunalmayextendthistimelimitintheinterestsofjustice.Failuretoadheretothistimelimitshallnotconstituteabasisforchallengingtheaward.

INTL8 Consistentwiththeexpeditednatureofarbitration,pre-hearinginformationexchangeshallbelimitedtothereasonableproductionofrelevant,non-privilegeddocuments,carriedoutexpeditiously.

Enforcementofinternationalawardsisfacilitatedbythe1958UNConventionontheRecognitionandEnforcementofForeignArbitralAwards(the“NewYorkConvention”),whichhasbeenratifiedbymorethan110nations,andfacilitatedinthishemispherebytheInter-AmericanConventiononInternationalCommercialArbitration(the“PanamaConvention”).

B.ClausesforUseinConstructionDisputes

TheAAAConstructionIndustryArbitrationRulesandMediationProceduresaredesignedtoexpeditethedisputeresolutionprocessandhelptheAAAbemoreresponsivetotheneedsoftheconstructionindustry.Therulescontaina“fasttrack”arbitrationsystemforcasesinvolvingclaimsoflessthan$75,000;enhancementstothe“regulartrack”rules;andaLarge,ComplexConstructioncasetrackforuseincasesinvolvingclaimsofatleast$500,000.


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Thepartiescanprovideforarbitrationoffuturedisputesbyinsertingthefollowingclauseintotheircontracts.

CONST1 Anycontroversyorclaimarisingoutoforrelatingtothiscontract,orthebreachthereof,shallbesettledbyarbitra-tionadministeredbytheAmericanArbitrationAssociationunderitsConstructionIndustryArbitrationRules,andjudgmentontheawardrenderedbythearbitrator(s)maybeenteredinanycourthavingjurisdictionthereof.

CONST2 We,theundersignedparties,herebyagreetosubmittoarbitrationadministeredbytheAmericanArbitrationAssociationunderitsConstructionIndustryArbitrationRulesthefollowingcontroversy:(citebriefly).Wefurtheragreethatthecontroversybesubmittedto(one)(three)arbitrator(s).Wefurtheragreethatwewillfaithfullyobservethisagreementandtherules,andthatajudgmentofanycourthavingjurisdictionmaybeenteredontheaward.

Ifpartieswishtoadoptmediationaspartoftheircontractualdisputesettlementprocedure,theycaninsertthefollowingmediationclauseinconjunctionwithastandardarbitrationprovision,andmayalsoprovidethattherequirementoffilinganoticeofclaimwithrespecttothedisputesubmittedtomediationshallbesuspendeduntiltheconclusionofthemediationprocess.

CONST3 Ifadisputearisesoutoforrelatestothiscontract,orthebreachthereof,andifthedisputecannotbesettledthroughnegotiation,thepartiesagreefirsttotryingoodfaithtosettlethedisputebymediationadministeredbytheAmericanArbitrationAssociationunderitsConstructionIndustryMediationProceduresbeforeresortingtoarbitra-tion,litigation,orsomeotherdisputeresolutiontechnique.

Partiesalsohavetheoptionofinsertinga“step”mediation-arbitrationclauseintotheircontracts.Adisputeresolutionhybrid,theclauseprovidesfirstformediationandthen,ifthedisputeisnotresolvedwithinaspecifiedtimeframe,arbitration.

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CONST4 Anycontroversyorclaimarisingoutoforrelatingtothiscontractorbreachthereof,shallbesettledbymediationundertheConstructionIndustryMediationProceduresoftheAmericanArbitrationAssociation.Ifwithin30daysafterserviceofawrittendemandformediation,themediationdoesnotresultinsettlementofthedispute,thenanyunresolvedcontroversyorclaimarisingfromorrelatingtothiscontractorbreachthereofshallbesettledbyarbitrationadministeredbytheAmericanArbitrationAssociationinaccordancewithitsConstructionIndustryArbitrationRulesandjudgmentontheawardrenderedbythearbitrator(s)maybeenteredinanycourthavingjurisdictionthereof.

Ifthepartieswanttouseamediatortoresolveanexistingdispute,theycanenterintothefollowingsubmission.

CONST5 Thepartiesherebysubmitthefollowingdisputetomedia-tionadministeredbytheAmericanArbitrationAssociationunderitsConstructionIndustryMediationProcedures(theclausemayalsoprovideforthequalificationsofthemediator(s),methodofpayment,localeofmeetings,thetollingofthestatuteoflimitations,pre-arbitrationstepclausewithtimeframesandanyotheritemofconcerntotheparties).

C.ClausesforUseinEmploymentDisputes

Conflictswhichariseduringthecourseofemployment,suchaswrong-fultermination,sexualharassmentanddiscriminationbasedonrace,color,religion,sex,nationalorigin,ageanddisability,haveredefinedresponsiblecorporatepracticeandemployeerelations.TheAAAthereforehasdevelopedspecialrulescalledtheNationalRulesfortheResolutionofEmploymentDisputes.TheAAA’spolicyonemploy-mentADRisguidedbythestateofexistinglaw,aswellasitsobligationtoactinanimpartialmanner.Infollowingthelaw,andintheinterestof


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providinganappropriateforumfortheresolutionofemploymentdisputes,theAssociationadministersdisputeresolutionprogramswhichmeetthedueprocessstandardsasoutlinedinitsNationalRulesfortheResolutionofEmploymentDisputesandtheDueProcessProtocolforMediationandArbitrationofStatutoryDisputesArisingoutoftheEmploymentRelationship.IftheAssociationdeterminesthatadisputeresolutionprogramonitsfacesubstantiallyandmateriallydeviatesfromtheminimumdueprocessstandardsoftheNationalRulesfortheResolutionofEmploymentDisputesandtheprotocol,theAssociationwilldeclinetoadministercasesunderthatprogram.Otherissueswillbepresentedtothearbitratorfordetermination.

AnemployerintendingtoincorporatetheserulesortorefertothedisputeresolutionservicesoftheAAAinanemploymentADRplan,shall,atleast30dayspriortotheplannedeffectivedateoftheprogram,(1)notifyand(2)providetheAssociationwithacopyoftheemploymentdisputeresolutionplan.Ifanemployerdoesnotcomplywiththisrequirement,theAssociationreservestherighttodeclineitsadministrativeservices.

Partiescanprovideforarbitrationoffuturedisputesbyinsertingthefollowingclauseintotheiremploymentcontracts,personnelmanualsorpolicystatements,employmentapplications,orotheragreements.

EMPL1 Anycontroversyorclaimarisingoutoforrelatingtothis[employmentapplication;employmentADRprogram;employmentcontract]shallbesettledbyarbitrationadministeredbytheAmericanArbitrationAssociationunderitsNationalRulesfortheResolutionofEmploymentDisputesandjudgmentupontheawardrenderedbythearbitrator(s)maybeenteredinanycourthavingjurisdictionthereof.

Arbitrationofexistingdisputescanbeaccomplishedbyuseofthefollowingclause.

EMPL2 We,theundersignedparties,herebyagreetosubmittoarbitration,administeredbytheAmericanArbitration

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AssociationunderitsNationalRulesfortheResolutionofEmploymentDisputes,thefollowingcontroversy:(describebriefly).Wefurtheragreethattheabovecontroversybesubmittedto(one)(three)arbitrator(s)selectedfromtherosterofarbitratorsoftheAmericanArbitrationAssociation,andthatajudgmentofanycourthavingjurisdictionmaybeenteredontheaward.

Partiesmayagreetousemediationonaninformalbasisforselecteddisputes,ormediationmaybedesignatedinapersonnelmanualasasteppriortoarbitration,litigationorsomeotherdisputeresolutiontechnique.Ifthepartieswanttoadoptmediationasapartoftheircontractualdispute-settlementprocedure,theycanaddthefollowingmediationclausetotheircontract.

EMPL3 Ifadisputearisesoutoforrelatestothis[employmentapplication;employmentADRprogram;employmentcontract]orthebreachthereof,andifthedisputecannotbesettledthroughnegotiation,thepartiesagreefirsttotryingoodfaithtosettlethedisputebymediationadministeredbytheAmericanArbitrationAssociationunderitsNationalRulesfortheResolutionofEmploymentDisputes,beforeresortingtoarbitration,litigationorsomeotherdisputeresolutionprocedure.


EMPL4 Thepartiesherebysubmitthefollowingdisputetomedia-tionadministeredbytheAmericanArbitrationAssociationunderitsNationalRulesfortheResolutionofEmploymentDisputes(theclausemayalsoprovideforthequalificationsofthemediator(s),methodofpayment,localeofmeetings,andanyotheritemofconcerntotheparties).

D.ClausesforUseinPatentDisputes

Thesuitabilityofarbitrationasapromptandeffectivemeansofresolving


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intellectualpropertydisputeshasbeenwellrecognizedinrecentyears.Thosewhouseandsupportarbitrationasawayofresolvingintellectualpropertyandlicensingdisputeshaveacknowledgedthefollowingadvantagesofarbitrationoverlitigationinthistechnicalfield:relativespeedandeconomy,privacy,convenience,informality,reducedlikelihoodofdamagetoongoingbusinessrelationships,greatersuitabilitytointernationalproblems,and,especiallyimportant,theabilityofthepartiestoselectarbitratorswhoareexpertsandfamiliarwiththesubjectmatterofthedispute.

Theawardisbindingonlyonthepartiestothearbitration,andthepartiesmayagreethattheawardwillbemodifiedifthepatentthatisthesubjectofthearbitrationissubsequentlydeterminedtobeinvalidorunenforceable.Ifpartiesforeseethepossibilityofneedingemergencyreliefakintoatemporaryrestrainingorder,theymightspecifyanarbitratorbynameforthatpurposeintheirarbitrationclauseorauthorizetheAAAtonameapreliminaryreliefarbitrator;forsampleclauses,consultSectionV,discussionofPreliminaryRelief.Partiescanprovideforarbitrationoffuturedisputesbyinsertingthefollowingclauseintotheircontracts.

PATENT1 Anycontroversyorclaimarisingoutoforrelatingtothiscontract,orthebreachthereof,shallbesettledbyarbitrationadministeredbytheAmericanArbitrationAssociationunderitsPatentArbitrationRules,andjudgmentontheawardrenderedbythearbitrator(s)maybeenteredbyanycourthavingjurisdictionthereof.

Arbitrationofexistingdisputesmaybeaccomplishedbyuseofthefollowingclause.

PATENT2 We,theundersignedparties,herebyagreetosubmittoarbitrationadministeredbytheAmericanArbitrationAssociationunderitsPatentArbitrationRulesthefollowingcontroversy:(describebriefly).Wefurtheragreethattheabovecontroversybesubmittedto(one)

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(three)arbitrator(s),andthatajudgmentofanycourthavingjurisdictionmaybeenteredontheaward.

Ifpartieswanttoadoptmediationasapartoftheircontractualdisputesettlementprocedure,theycaninsertthefollowingmediationclauseinconjunctionwithastandardarbitrationprovision.

PATENT3 Ifadisputearisesoutoforrelatestothiscontract,orthebreachthereof,andifthedisputecannotbesettledthroughnegotiation,thepartiesagreefirsttotryingoodfaithtosettlethedisputebymediationadminis-teredbytheAmericanArbitrationAssociationunderitsCommercialMediationProceduresbeforeresortingtoarbitration,litigation,orsomeotherdisputeresolutionprocedure.


PATENT4 ThepartiesherebysubmitthefollowingdisputetomediationadministeredbytheAmericanArbitrationAssociationunderitsCommercialMediationProcedures(theclausemayalsoprovideforthequalificationsofthemediator(s),methodofpayment,localeofmeetings,andanyotheritemofconcerntotheparties).

V. Other Provisions That Might Be Considered

ThissectioncontainsvariousprovisionswhichexpanduponandaresupplementaltothebasicdisputeresolutionclausessetforthinSectionsIIIandIV.Thelistingofsuchprovisionsisnotintendedtobeall-inclusiveanddoesnotnecessarilyindicatethattheAAAendorsestheuseofsuchadditionallanguage.TheAAArecognizes,however,thatsomedrafterschoosetoexpandtheirdisputeresolutionclausestoreflectatleastsomeoftheseideas.Sinceitisimportantthatpractitionersbewellinformedwhenmakingchoicesindrafting,thesectionalsosetsforth,whereappropriate,certainoftheprosand


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consofadoptingthevarioussupplementalprovisions.

A.SpecifyingaMethodofSelectionandtheNumberofArbitrators

UndertheAAA’sarbitrationrules,arbitratorsaregenerallyselectedusingalistingprocess.TheAAAcasemanagerprovideseachpartywithalistofproposedarbitratorswhoaregenerallyfamiliarwiththesubjectmatterinvolvedinthedispute.Eachsideisprovidedanum-berofdaystostrikeanyunacceptablenames,numbertheremainingnamesinorderofpreference,andreturnthelisttotheAAA.Thecasemanagertheninvitespersonstoservefromthenamesremainingonthelist,inthedesignatedorderofmutualpreference.Thepartiesmayagreetohaveonearbitratororthree(whichincreasesthecost).Ifpartiesdonotagreeonthenumberofarbitrator(s),itwillbelefttothediscretionofthecasemanager.

Thepartiesmayuseotherarbitratorappointmentsystems,suchastheparty-appointedmethodinwhicheachsidedesignatesonearbitratorandthetwothusselectedappointthechairofthepanel.

TheCommercialArbitrationRulesandtheConstructionIndustryArbitrationRulesprovidethatunlessthepartiesspecificallyagreeinwritingthattheparty-appointedarbitratorsaretobenon-neutral,arbitratorsappointedbythepartiesmustmeettheimpartialityandindependencestandardssetforthwithintherules.Ifpartiesintendthattheirpartyappointedarbitratorsserveinanon-neutralcapacity,thisshouldbeclearlystatedwithintheirclause.

Thearbitrationclausecanalsospecifybynametheindividualwhomthepartieswantastheirarbitrator.However,thepotentialunavailabilityofthenamedindividualinthefuturemayposearisk.

Alloftheseissuesandotherscanbedealtwithinthearbitrationclause.

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Someillustrativeprovisionsfollow.

ARBSEL1 Thearbitratorselectedbytheclaimantandthearbi-tratorselectedbyrespondentshall,withintendaysoftheirappointment,selectathirdneutralarbitrator.Intheeventthattheyareunabletodoso,thepartiesortheirattorneysmayrequesttheAmericanArbitrationAssociationtoappointthethirdneutralarbitrator.Priortothecommencementofhearings,eachofthearbitratorsappointedshallprovideanoathorundertakingofimpartiality.

ARBSEL2 Within15daysafterthecommencementofarbitration,eachpartyshallselectonepersontoactasarbitratorandthetwoselectedshallselectathirdarbitratorwithintendaysoftheirappointment.[Thepartyselectedarbitratorswillserveinanon-neutralcapacity.]Ifthearbitratorsselectedbythepartiesareunableorfailtoagreeuponthethirdarbitrator,thethirdarbitratorshallbeselectedbytheAmericanArbitrationAssociation.

ARBSEL3 Intheeventthatarbitrationisnecessary,[nameofspecificarbitrator]shallactasthearbitrator.

Whenprovidingfordirectappointmentofthearbitrator(s)bytheparties,itisbesttospecifyatimeframewithinwhichitmustbeaccomplished.Also,inmanyjurisdictions,thelawpermitsthecourttoappointarbitratorswhereprivately-agreedmeansfail.Sucharesultmaybetimeconsuming,costly,andunpredictable.Partieswhoseektoestablishanad-hocmethodofarbitratorappointmentmightbewelladvisedtoprovideafallback,suchas,shouldtheparticularprocedurefailforanyreason,“arbitratorsshallbeappointedasprovidedintheAAACommercialArbitrationRules.”

B.ArbitratorQualifications


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Thepartiesmaywishthatoneormoreofthearbitratorsbealawyeroranaccountantoranexpertincomputertechnology,etc.Insomeinstances,itmakesmoresensetospecifythatoneofthreearbitratorsbeanaccountant,forexample,thantoturntheentireproceedingovertothreeaccountants.Sampleclausesprovidingforspecificqualificationsofarbitratorsaresetforthbelow.

QUAL1 Thearbitratorshallbeacertifiedpublicaccountant.

QUAL2 Thearbitratorshallbeapracticingattorney[oraretiredjudge][ofthe[specify]Court].

QUAL3 Thearbitrationproceedingsshallbeconductedbeforeapanelofthreeneutralarbitrators,allofwhomshallbemembersofthebarofthestateof[specify],activelyengagedinthepracticeoflawforatleasttenyears.

QUAL4 Thepanelofthreearbitratorsshallconsistofonecontractor,onearchitect,andoneconstructionattorney.

QUAL5 Thearbitratorswillbeselectedfromapanelofpersonshavingexperiencewithandknowledgeofelectroniccomputersandthecomputerbusiness,andatleastoneofthearbitratorsselectedwillbeanattorney.

QUAL6 Intheeventthatanyparty’sclaimexceeds$1million,exclusiveofinterestandattorneys’fees,thedisputeshallbeheardanddeterminedbythreearbitrators.

Partiesmightwishtospecifythatthearbitratorshouldorshouldnotbeanationalorcitizenofaparticularcountry.Thefollowingexamplescanbeaddedtothearbitrationclausetodealwiththisconcern.

NATLY1 Thearbitratorshallbeanationalof[country].

NATLY2 Thearbitratorshallnotbeanationalofeither[countryA]or[countryB].

NATLY3 Thearbitratorshallnotbeofthenationalityofeitheroftheparties.

C.LocaleProvisions

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Partiesmightwanttoaddlanguagespecifyingtheplaceofthearbitration.Thechoiceoftheproperplacetoarbitrateismostimportantbecausetheplaceofarbitrationimpliesgenerallyachoiceoftheapplicableprocedurallaw,whichinturnaffectsquestionsofarbitrability,procedure,courtinterventionandenforcement.

Inspecifyingalocale,partiesshouldconsider(1)theconvenienceofthelocation(e.g.,availabilityofwitnesses,localcounsel,transportation,hotels,meetingfacilities,courtreporters,etc.);(2)theavailablepoolofqualifiedarbitratorswithinthegeographicalarea;and(3)theapplicableproceduralandsubstantivelaw.Ofparticularimportanceininternationalcasesistheapplicabilityofaconventionprovidingforrecognitionandenforcementofarbitralagreementsandawardsandthearbitrationregimeatthechosensite.

Anexampleoflocaleprovisionsthatmightappearinanarbitrationclausefollows.

LOC1 Theplaceofarbitrationshallbe[city],[state],or[country].

D.Language

Inmattersinvolvingmultilingualparties,thearbitrationagreementoftenspecifiesthelanguageinwhichthearbitrationwillbeconducted.Examplesofsuchlanguagefollow.

LANG1 Thelanguage(s)ofthearbitrationshallbe[specify].

LANG2 Thearbitrationshallbeconductedinthelanguageinwhichthecontractwaswritten.

Sucharbitrationclausescouldalsodealwithselectionandcostallocationofaninterpreter.

E.GoverningLaw


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Itiscommonforpartiestospecifythelawthatwillgovernthecontractand/orthearbitrationproceedings.Someexamplesfollow.

GOV1 ThisagreementshallbegovernedbyandinterpretedinaccordancewiththelawsoftheStateof[specify].Thepartiesacknowledgethatthisagreementevidencesatransactioninvolvinginterstatecommerce.TheUnitedStatesArbitrationActshallgoverntheinterpretation,enforcement,andproceedingspursuanttothearbitrationclauseinthisagreement.

GOV2 DisputesunderthisclauseshallberesolvedbyarbitrationinaccordancewithTitle9oftheUSCode(UnitedStatesArbitrationAct)andtheCommercialArbitrationRulesoftheAmericanArbitrationAssociation.

GOV3 ThiscontractshallbegovernedbythelawsoftheStateof[specify].

Ininternationalcases,wherethepartieshavenotprovidedforthelawapplicabletothesubstanceofthedispute,theAAA’sInternationalArbitrationRulescontainspecificguidelinesforarbitratorsregardingapplicablelaw.SeethediscussionconcerningInternationalDisputes.

F.ConditionsPrecedenttoArbitration

Underanagreementoftheparties,satisfactionofspecifiedconditionsmayberequiredbeforeadisputeisreadyforarbitration.Examplesofsuchconditionsprecedentincludewrittennotificationofclaimswithinafixedperiodoftimeandexhaustionofothercontractuallyestablishedprocedures,suchassubmissionofclaimstoanarchitectorengineer.Thesekindsofprovisionsmay,however,beasourceofdelayandmayrequirelinkagewithastatuteoflimitationswaiver(seebelow).Anexampleofa“conditionprecedent”clausefollows.

CONPRE1 Ifadisputearisesfromorrelatestothiscontract,thepartiesagreethatuponrequestofeitherpartytheywillseektheadviceof[amutuallyselectedengineer]andtryingoodfaithtosettlethedisputewithin30daysofthatrequest,followingwhicheitherpartymaysubmitthemattertomediationundertheCommercialMediation

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ProceduresoftheAmericanArbitrationAssociation.Ifthematterisnotresolvedwithin60daysafterinitiationofmediation,eitherpartymaydemandarbitrationadministeredbytheAmericanArbitrationAssociationunderits[applicable]rules.

G.PreliminaryRelief

WhilepreliminaryreliefispermittedundertheAAA’scommercialrules,itisappropriatetoprovidespecificallyforitifaneedforaninterimremedyisanticipated.OnewaytodosoistoincorporatetheOptionalRulesforEmergencyMeasuresofProtectionoftheAAACommercialArbitrationRulesandMediationProcedures,discussedabove.Alternatively,ifthepartiesforeseethepossibilityofneedingemergencyreliefakintoatemporaryrestrainingorder,theymightspecifyanarbitratorbynameforthatpurposeintheirarbitrationclauseorauthorizetheAAAtonameapreliminaryreliefarbitratortoensureanarbitratorisinplaceinsufficienttimetoaddressappropriateissues.

Specificclausesprovidingforpreliminaryreliefaresetforthbelow.

PRELIM1 Eitherpartymayapplytothearbitratorseekinginjunctivereliefuntilthearbitrationawardisrenderedorthecontroversyisotherwiseresolved.Eitherpartyalsomay,withoutwaivinganyremedyunderthisagreement,seekfromanycourthavingjurisdictionanyinterimorprovisionalreliefthatisnecessarytoprotecttherightsorpropertyofthatparty,pendingtheestablishmentofthearbitraltribunal(orpendingthearbitraltribunal’sdeterminationofthemeritsofthecontroversy).

NotethattheAAA’srulesprovideforinterimreliefbythearbitratoruponapplicationofaparty.

Pendingtheoutcomeofthearbitration,partiesmayagreetoholdinescrowmoney,aletterofcredit,goods,orthesubjectmatterofthearbitration.Asampleofaclauseprovidingforsuchescrowfollows.

ESCROW1 Pendingtheoutcomeofthearbitration[nameofparty]shallplaceinescrowwith[lawfirm,institution,orAAA]


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astheescrowagent,[thesumof____________________,aletterofcredit,goods,orthesubjectmatterindispute].Theescrowagentshallbeentitledtoreleasethe[funds,letterofcredit,goods,orsubjectmatterindispute]asdirectedbythearbitrator(s)intheaward,unlessthepartiesagreeotherwiseinwriting.

H.Consolidation

Wheretherearemultiplepartieswithdisputesarisingfromthesametransaction,complicationscanoftenbereducedbytheconsolidationofalldisputes.Sincearbitrationisaprocessbasedonvoluntarycontractualparticipation,partiesmaynotberequiredtoarbitrateadisputewithouttheirconsent.However,partiescanprovidefortheconsolidationoftwoormoreseparatearbitrationsintoasingleproceedingorpermitthejoinderofathirdpartyintoanarbitration.Inaconstructiondispute,consolidatedproceedingsmayeliminatetheneedforduplicativepresentationsofclaimsandavoidthepossibilityofconflictingrulingsfromdifferentpanelsofarbitra-tors.However,consolidatingclaimsmightbeasourceofdelayandexpense.Anexampleoflanguagethatcanbeincludedinanarbitra-tionclausefollows.

CONSOL1 Theowner,thecontractor,andallsubcontractors,specialtycontractors,materialsuppliers,engineers,designers,architects,constructionlenders,bondingcompanies,andotherpartiesconcernedwiththeconstructionofthestructurearebound,eachtoeachother,bythisarbitrationclause,providedthattheyhavesignedthiscontractoracontractthatincorporatesthiscontractbyreferenceorsignedanyotheragreementtobeboundbythisarbitrationclause.Eachsuchpartyagreesthatitmaybejoinedasanadditionalpartytoanarbitrationinvolvingotherpartiesunderanysuchagreement.Ifmorethanonearbitrationisbegununderanysuchagreementandanypartycontendsthattwoor

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morearbitrationsaresubstantiallyrelatedandthattheissuesshouldbeheardinoneproceeding,thearbitrator(s)selectedinthefirst-filedofsuchproceedingsshalldeterminewhether,intheinterestsofjusticeandefficiency,theproceedingsshouldbeconsolidatedbeforethat(those)arbitrator(s).

I.DocumentDiscovery

UndertheAAArules,arbitratorsareauthorizedtodirectaprehearingexchangeofdocuments.Thepartiestypicallydiscusssuchanexchangeandseektoagreeonitsscope.Inmost(butnotall)instances,arbitratorswillorderpromptproductionoflimitednumbersofdocumentswhicharedirectlyrelevanttotheissuesinvolved.Insomeinstances,partiesmightwanttoensurethatsuchproductionwillinfactoccurandthusprovideforitintheirarbitrationclause.Indoingso,however,theyshouldbemindfulofwhatscopeofdocumentproductiontheydesire.Thismaybedifficulttodecideattheoutset.Ifthepartiesaddressdiscoveryintheclause,theymightincludetimelimitationsastowhenalldiscoveryshouldbecompletedandmightspecifythatthearbitratorshallresolveoutstandingdiscoveryissues.Samplelanguageissetforthbelow.

DOC1 Consistentwiththeexpeditednatureofarbitration,eachpartywill,uponthewrittenrequestoftheotherparty,promptlyprovidetheotherwithcopiesofdocuments[relevanttotheissuesraisedbyanyclaimorcounterclaim][onwhichtheproducingpartymayrelyinsupportoforinoppositiontoanyclaimordefense].Anydisputeregard-ingdiscovery,ortherelevanceorscopethereof,shallbedeterminedbythe[arbitrator(s)][chairofthearbitrationpanel],whichdeterminationshallbeconclusive.Alldiscoveryshallbecompletedwithin[45][60]daysfollowingtheappointmentofthearbitrator(s).

TheAAA’svariouscommercialarbitrationrulesprovideanopportu-


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nityforanadministrativeconferencewiththeAAAstaffand/orapre-liminaryhearingwiththearbitrator.Thepurposesofsuchmeetingsincludeestablishingtheextentofandascheduleforproductionofrelevantdocumentsandotherinformation.

J.Depositions

Generallyarbitratorsprefertohearandbeabletoquestionwitnessesatahearingratherthanrelyondepositiontestimony.However,par-tiesarefreetoprovideintheirarbitrationclauseforatailoreddiscov-eryprogram,preferablytobemanagedbythearbitrator.Thismightoccur,forexample,ifthepartiesanticipatetheneedfordistantwit-nesseswhowouldnotbeabletotestifyexceptthroughdepositionsor,inthealternative,bythearbitratorholdingahearingwherethewitnessislocatedandsubjecttosubpoena.Inmostcaseswherepartiesprovidefordepositions,theydosoinverylimitedfashion,i.e.,theymightspecifya30-daydepositionperiod,witheachsidepermittedthreedepositions,noneofwhichwouldlastmorethanthreehours.Allobjectionswouldbereservedforthearbitrationhearingandwouldnotevenbenotedatthedepositionexceptforobjectionsbasedonprivilegeorextremeconfidentiality.Samplelanguageprovidingforsuchdepositionsissetforthbelow.

DEP1 Attherequestofaparty,thearbitrator(s)shallhavethediscretiontoorderexaminationbydepositionofwitnessestotheextentthearbitratordeemssuchadditionaldiscoveryrelevantandappropriate.Depositionsshallbelimitedtoamaximumof[three][insertnumber]perpartyandshallbeheldwithin30daysofthemakingofarequest.Additionaldepositionsmaybescheduledonlywiththepermissionofthe[arbitrator(s)][chairofthearbitrationpanel],andforgoodcauseshown.Eachdepositionshallbelimitedtoamaximumof[threehours][sixhours][oneday’s]dura-tion.Allobjectionsarereservedforthearbitrationhearingexceptforobjectionsbasedonprivilegeandproprietaryorconfidentialinformation.

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K.DurationofArbitrationProceeding

WhileAAACommercialArbitrationRulesnormallyprovideforanawardwithin30daysoftheclosingofthehearing,partiessometimesunderscoretheirwishforanexpeditedresultbyprovidinginthearbitrationclause,forexample,thattherewillbeanawardwithinaspecifiednumberofmonthsofthenoticeofintentiontoarbitrateandthatthearbitrator(s)mustagreetothetimeconstraintsbeforeacceptingappointment.Beforeadoptingsuchlanguage,however,thepartiesshouldconsiderwhetherthedeadlineisrealisticandwhatwouldhappenifthedeadlinewerenotmetundercircumstanceswherethepartieshadnotmutuallyagreedtoextendit(e.g.,whethertheawardwouldbeenforceable).Itthusmaybehelpfultoallowthearbitratortoextendtimelimitsinappropriatecircumstances.Samplelanguageissetforthbelow.

TIME1 Theawardshallbemadewithinninemonthsofthefilingofthenoticeofintentiontoarbitrate(demand),andthearbitrator(s)shallagreetocomplywiththisschedulebeforeacceptingappointment.However,thistimelimitmaybeextendedbyagreementofthepartiesorbythearbitrator(s)ifnecessary.

L.Remedies

UnderabroadarbitrationclauseandmostAAArules,thearbitratormaygrant“anyremedyorreliefthatthearbitratordeemsjustandequitable”withinthescopeoftheparties’agreement.Sometimespartieswanttoincludeorexcludecertainspecificremedies.Examplesofclausesdealingwithremediesfollow.

REM1 Thearbitratorswillhavenoauthoritytoawardpunitiveorotherdamagesnotmeasuredbytheprevailingparty’sactualdamages,exceptasmayberequiredbystatute.

REM2 Innoeventshallanawardinanarbitrationinitiatedunderthisclauseexceed$________.


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REM3 Innoeventshallanawardinanarbitrationinitiatedunderthisclauseexceed$________foranyclaimant.

REM4 Thearbitrator(s)shallnotawardconsequentialdamagesinanyarbitrationinitiatedunderthissection.

REM5 Anyawardinanarbitrationinitiatedunderthisclauseshallbelimitedtomonetarydamagesandshallincludenoinjunctionordirectiontoanypartyotherthanthedirectiontopayamonetaryamount.

REM6 Ifthearbitrator(s)findliabilityinanyarbitrationinitiatedunderthisclause,theyshallawardliquidateddamagesintheamountof$________.

REM7 Anymonetaryawardinanarbitrationinitiatedunderthisclauseshallincludepre-awardinterestattherateof____%fromthetimeoftheactoractsgivingrisetotheaward.

M.“Baseball”Arbitration

“Baseball”arbitrationisamethodologyusedinmanydifferentcontextsinadditiontobaseballplayers’salarydisputes,andisparticularlyeffectivewhenpartieshavealong-termrelationship.Theprocedureinvolveseachpartysubmittinganumbertothearbitrator(s)andservingthenumberonhisorheradversaryontheunderstandingthat,follow-ingahearing,thearbitrator(s)willpickoneofthesubmittednumbers,nothingelse.Akeyaspectofthisapproachisthatthereisincentiveforapartytosubmitahighlyreasonablenumber,sincethisincreasesthelikelihoodthatthearbitrator(s)willselectthatnumber.Insomeinstances,theprocessofsubmittingthenumbersmovesthepartiessoclosetogetherthatthedisputeissettledwithoutahearing.Samplelanguageprovidingfor“baseball”arbitrationissetforthbelow.

BASEBALL1 Eachpartyshallsubmittothearbitratorandexchangewitheachotherinadvanceofthehearingtheirlast,bestoffers.Thearbitratorshallbelimitedtoawardingonlyoneortheotherofthetwofiguressubmitted.

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N.ArbitrationWithinMonetaryLimits

Partiesareoftenabletonegotiatetoapointbutarethenunabletoclosetheremaininggapbetweentheirrespectivepositions.Byset-tingupanarbitrationthatmustresultinanawardwithinthegapthatremainsbetweentheparties,thepartiesareabletoeliminateextremerisk,whilegainingthebenefitoftheextenttowhichtheirnegotiationsweresuccessful.

Therearetwocommonly-usedapproaches.Thefirstinvolvesinformingthearbitrator(s)thattheawardshouldbesomewherewithinaspeci-fiedmonetaryrange.Samplecontractlanguageprovidingforthismethodologyissetforthbelow.

LIMITS1 Anyawardofthearbitratorinfavorof[specifyparty]andagainst[specifyparty]shallbeatleast[specifyadollaramount]butshallnotexceed[specifyadollaramount].[Specifyaparty]expresslywaivesanyclaiminexcessof[specifyadollaramount]andagreesthatitsrecoveryshallnotexceedthatamount.Anysuchawardshallbeinsatisfactionofallclaimsby[specifyaparty]against[specifyaparty].

Asecondapproachisforthepartiestoagreebutnottellthearbitrator(s)thattheamountofrecoverywill,forexample,besomewherebetween$5and$10.Iftheawardislessthan$5,thenitisraisedto$5pursuanttotheagreement;iftheawardismorethan$10,thenitisloweredto$10pursuanttotheagreement;iftheawardiswithinthe$5-10range,thentheamountawardedbythearbitrator(s)isunchanged.Samplecontractlanguageprovidingforthismethodologyissetforthbelow.

LIMITS2 Intheeventthatthearbitratordeniestheclaimorawardsanamountlessthantheminimumamountof[specify],thenthisminimumamountshallbepaidtotheclaimant.Shouldthearbitrator’sawardexceedthemaximumamountof[specify],thenonlythismaximumamountshallbepaidtotheclaimant.Itisfurtherunderstoodbetweenthepartiesthat,ifthearbitratorawardsanamountbetweentheminimumandthemaximumstipulatedrange,thentheexactawarded


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amountwillbepaidtotheclaimant.Thepartiesfurtheragreethatthisagreementisprivatebetweenthemandwillnotbedisclosedtothearbitrator.

O.AssessmentofAttorneys’Fees

TheAAArulesgenerallyprovidethattheadministrativefeesbeborneasincurredandthatthearbitrators’compensationbeallocatedequallybetweenthepartiesand,exceptforinternationalrules,aresilentconcerningattorneys’fees;butthiscanbemodifiedbyagreementoftheparties.Feesandexpensesofthearbitration,includingattorneys’fees,canbedealtwithinthearbitrationclause.Sometypicallanguagedealingwithfeesandexpensesfollow.

FEE1 Theprevailingpartyshallbeentitledtoanawardofreasonableattorneyfees.

FEE2 Thearbitratorsshallawardtotheprevailingparty,ifany,asdeterminedbythearbitrators,allofitscostsandfees.“Costsandfees”meanallreasonablepre-awardexpensesofthearbitration,includingthearbitrators’fees,administrativefees,travelexpenses,out-of-pocketexpensessuchascopyingandtelephone,courtcosts,witnessfees,andattorneys’fees.

FEE3 Eachpartyshallbearitsowncostsandexpensesandanequalshareofthearbitrators’andadministrativefeesofarbitration.

FEE4 Thearbitratorsmaydeterminehowthecostsandexpensesofthearbitrationshallbeallocatedbetweentheparties,buttheyshallnotawardattorneys’fees.

P.ReasonedOpinionAccompanyingtheAward

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Indomesticcommercialcases,arbitratorsusuallywillnotwriteareasonedopinionexplainingtheirawardunlesssuchanopinionisrequestedbyallparties.Whilesometakethepositionthatreasonedopinionsdetractfromfinalityiftheyfacilitatepost-arbitrationresorttothecourts,partiessometimesdesiresuchopinions,particularlyinlarge,complexcasesorasalreadyprovidedbymostapplicablerulesininternationaldisputes.Ifthepartieswantsuchanopinion,theycanincludelanguagesuchasthefollowingintheirarbitrationclause.

OPIN1 Theawardofthearbitratorsshallbeaccompaniedbyareasonedopinion.

OPIN2 Theawardshallbeinwriting,shallbesignedbyamajor-ityofthearbitrators,andshallincludeastatementsettingforththereasonsforthedispositionofanyclaim.

OPIN3 Theawardshallincludefindingsoffact[andconclusionsoflaw].

OPIN4 Theawardshallincludeabreakdownastospecificclaims.

Q.Confidentiality

WhiletheAAAandarbitratorsadheretocertainstandardsconcerningtheprivacyorconfidentialityofthehearings(seetheAAA-ABACodeofEthicsforArbitratorsinCommercialDisputes,CanonVI),partiesmightalsowishtoimposelimitsonthemselvesastohowmuchinformationregardingthedisputemaybedisclosedoutsidethehearing.Thefollowinglanguagemighthelpservethispurpose.

CONF1 Exceptasmayberequiredbylaw,neitherapartynoranarbitratormaydisclosetheexistence,content,orresultsofanyarbitrationhereunderwithoutthepriorwrittenconsentofbothparties.

Theprecedinglanguagecouldalsobemodifiedtorestrictonlydisclosureofcertaininformation(e.g.,tradesecrets).

R.Appeal


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Thebasicobjectiveofarbitrationisafair,fastandexpertresult,achievedeconomically.Consistentwiththisgoal,anarbitrationawardtraditionallywillbesetasideonlyinegregiouscircumstancessuchasdemonstrablebiasofanarbitrator.Sometimes,however,thepartiesdesireamorecomprehensiveappeal,mostofteninthesettingoflegallycomplexcases.Providingamechanismforsuchanappealassuresthatthelosingpartywilluseit.Whilepartiescanattempttoprovideforanappealinthecourtsystempursuanttotraditionalstandardsofcourtreview,theauthorityismixedastowhethercourtswillacceptappealsfromarbitrationonsuchabasis.Anotherapproachistoprovideforanappealtoanotherpanelofarbitratorswhowouldapplywhateverstandardofreviewthepartiesmightspecify.Setforthbelowisanexampleofarbitrationclauselanguageprovidingforthislattertypeofappeal.

APP1 Within30daysofreceiptofanyaward(whichshallnotbebindingifanappealistaken),anypartymaynotifytheAAAofanintentiontoappealtoasecondarbitraltribunal,constitutedinthesamemannerastheinitialtribunal.Theappealtribunalshallbeentitledtoadopttheinitialawardasitsown,modifytheinitialawardorsubstituteitsownawardfortheinitialaward.Theappealtribunalshallnotmodifyorreplacetheinitialawardexcept[formanifestdisregardoflaworfacts][forclearerrorsoflaworbecauseofclearandconvincingfactualerrors].Theawardoftheappealtribunalshallbefinalandbinding,andjudgmentmaybeenteredbyacourthavingjurisdictionthereof.

S.Mediation-Arbitration

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AclausemayprovidefirstformediationundertheAAA’smediationprocedures.Ifthemediationisunsuccessful,themediatorcouldbeauthorizedtoresolvethedisputeundertheAAA’sarbitrationrules.Thisprocess,issometimesreferredtoas“Med-Arb.”Exceptinunusualcircumstances,aprocedurewherebythesameindividualwhohasbeenservingasamediatorbecomesanarbitratorwhenthemediationfailsisnotrecommended,becauseitcouldinhibitthecandorwhichshouldcharacterizethemediationprocessand/oritcouldconveyevidence,legalpointsorsettlementpositionsexparte,improperlyinfluencingthearbitrator.Asampleofamed-arbclausefollows.

MEDARB1 Ifadisputearisesfromorrelatestothiscontractorthebreachthereof,andifthedisputecannotbesettledthroughdirectdiscussions,thepartiesagreetoendeavorfirsttosettlethedisputebymediationadministeredbytheAmericanArbitrationAssociationunderitsCommercialMediationProceduresbeforeresortingtoarbitration.Anyunresolvedcontroversyorclaimaris-ingfromorrelatingtothiscontractorbreachthereofshallbesettledbyarbitrationadministeredbytheAmericanArbitrationAssociationinaccordancewithitsCommercialArbitrationRules,andjudgmentontheawardrenderedbythearbitratormaybeenteredinanycourthavingjurisdictionthereof.Ifallpartiestothedisputeagree,amediatorinvolvedintheparties’mediationmaybeaskedtoserveasthearbitrator.

T.StatuteofLimitations

Partiesmaywishtoconsiderwhethertheapplicablestatuteoflimitationswillbetolledforthedurationofmediationproceedings,andcanrefertothefollowinglanguage.

STATLIM1 Therequirementsoffilinganoticeofclaimwithrespecttothedisputesubmittedtomediationshallbesuspendeduntiltheconclusionofthemediationprocess.


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U.DisputeResolutionBoards

ADisputeResolutionBoard(DRB)providesaprompt,rational,impartialreviewofdisputesbymutuallyacceptedexperts,whichfrequentlyresultsinsubstantialcostsavingsandcaneliminateyearsofwastedtimeandenergyinlitigation.DRBproceduresmaybemadeapartofconstructioncontractdocuments.

ThecontractshouldcontainaparagraphreflectingtheagreementtoestablishtheDRB.Thetextoftheactualproceduresalsoshouldbephysicallyincorporatedintothegeneralconditionsorsupplementaryconditionsofthecontractforconstructionwhereverpossibleandpractical,andsuchdocumentsastheinvitationtobiddersortherequestforproposalsshouldmentionthattheformationofaDRBiscontemplated.TheDRBproceduresshouldbecoordinatedwiththeotherdisputeresolutionproceduresrequiredbythecontractdocuments.

Suggestedlanguageforincorporationinthecontractfollows.

DRB1 ThepartiesshallimpanelaDisputeResolutionBoardofoneorthreemembersinaccordancewiththeDisputeResolutionBoardGuideSpecificationsoftheAmericanArbitrationAssociation.TheDRB,incloseconsultationwithallinterestedparties,willassistandrecommendtheresolutionofanydisputes,claims,andothercontroversiesthatmightariseamongtheparties.

V.MassTorts

ADRtechniquescanbeemployedprivatelybypartiesfacingthepros-pectofmasstortlitigationtoexploreinanonbindingfashiontheoptionsformanagement,evaluation,and/orresolutionofthedispute.Awiderangeofbindingandnonbindingtechniques,includingneu-tralevaluation,mediation,andarbitrationcanbeusedtoexplorethepotentialforresolutionofadisputeand/ortodevelopabasicframeworkfordiscussions.Althoughtheseoptionshavelimitationsandmaynotbeasubstituteforlitigationwithpossiblefullevidentiarytrials,theycanprovideausefulframeworkforearlydiscussionoftheissues.Thepartiesshouldbeabletoformulateprocedurestoassureconfidentialityandtoprotectagainsttheinappropriateuseofinformation.

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Conclusion

Adisputeresolutionclauseshouldaddressthespecialneedsofthepartiesinvolved.AninadequateADRclausecanproduceasmuchdelay,expense,andinconvenienceasatraditionallawsuit.Whenwritingadisputeresolutionclause,keepinmindthatitspurposeistoresolvedisputes,notcreatethem.Ifdisagreementsariseoverthemeaningoftheclause,itisoftenbecauseitfailedtoaddresstheparticularneedsoftheparties.Useofstandard,simpleAAAlanguagemayavoiddifficulties.DraftinganeffectiveADRagreementisthefirststepontheroadtosuccessfuldisputeresolution.

Afteradisputearises,partiescanrequestanadministrativeconferencewithaAAAcasemanagertoassisttheminestablishingappropriateproceduresnecessaryfortheiruniquecase.Thiscanbedonebeforeoraftermediatororarbitratorselection.Suchconferencescanexpeditetheproceedingsinmanycases.

ThisbrochuredescribeswaysinwhichsomepartieshavemodifiedtheAAA’stime-testedstandardclausetodealwithspecificconcerns.Giventhatcommercialtransactionsvarygreatly,itspurposeisnottourgeuseoftheprovisionscited,butrathertosuggesttherangeofpossibleoptions.ToarriveatthemostsuitableandeffectiveADRclause,partiesshouldconsultlegalcounselforguidanceandadvice.


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©2004, all rights are reserved by the American Arbitration Association.

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