Negotiate a Mediation and Arbitration Clause

On July 22, 2016, Posted by , In Business Cases,En,

Available | Disponible : French

Drafting a contract necessarily leads to question the mechanisms that will regulate a possible dispute. Given the long delays inherent to legal procedures, mediation and arbitration can offer a fast, confidential and effective solution to handle and resolve a conflict.

To illustrate, CMKZ receives a mandate from a company that wishes to revise a major contract before signing it. One of its specialized attorney in international trade law notes the fact that the arbitration clause included in the contract states that in case of dispute, the selection of the arbitrator is the exclusive choice of one party. This clause raises doubts about the arbitration process which has to reflect the principles of impartiality, fairness and transparency. The arbitrator’s nomination should rather reflect the interest of both parties, be made according to a detailed procedure, or refer to rules that have been adopted by arbitration institutions.

To avoid difficulties, and respond to our client’s demand, CMKZ decides to use a hybrid clause of mediation and arbitration that refers to the International Chamber of Commerce (ICC):

Any controversy or claim arising out of or relating to this Agreement will be submitted to one designated director of each party who will meet within thirty (30) days of receipt of a written request by one party to the other in order to resolve it. If the parties’ designated directors are not able to amicably settle the dispute within thirty (30) days of first meeting or if the parties’ designated directors do not meet within thirty (30) days of receipt of such request, the parties will refer said controversy or claim to proceedings under the ICC Mediation Rules. If the controversy or claim has not been settled pursuant to the said Rules within 60 days following the filing of a Request for Mediation or within such other period as the parties may agree in writing, such controversy or claim shall thereafter be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one arbitrator appointed in accordance with the said Rules of Arbitration. The arbitration shall be held in English. Where no party’s claim in the controversy or claim exceeds $250,000.00 USD, exclusive of interest and arbitration costs, the controversy or claim shall be resolved by submission of documents, unless the arbitrator determines that an oral hearing is necessary. The arbitrator shall establish a fair and equitable procedure for said submission of documents.

This clause incorporates detailed arbitration and mediation procedure rules. CMKZ also recommends that the clause be adapted to the client’s needs. It could for instance specify that the place in which the arbitration is going to take place would depend on the locality of the defender.

The use of hybrid clauses may avoid extended and expensive court procedures. They can also provide a competitive advantage to companies and offer the possibility to adapt the dispute resolution process to the particular needs of each company.

CMKZ’s lawyers are specialized in mediation and arbitration and can assist you in drafting and negotiating your contracts as well as in defending your interests.

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