Drafting ADR Clauses

One  of  the  benefits  and  strengths  of ADR proceedings is their adaptability to the particular set of
circumstances  of  the  parties and the nature and object of the dispute. Even though, arguably, there is  
no  such  thing  as a “perfect” or “ironclad” ADR clause, there are numerous features that could be
detrimental  to  the  best  interests  and  legal rights of the parties. There are several damning pitfalls that   
plague   ADR   clauses  today  that  need  to  be  addressed  before  any  attempts  are  made,
particularly   by   non-practitioners,   when drafting  these  complex  and  highly  technical  contractual
provisions.

Among   the   elements   that   must   be   given   careful   consideration   when   drafting,  adopting or
recommending a dispute resolution clause are whether, for instance:

• the clause should cover all disputes that may arise or only certain types;
  
• it  should  only  specify  arbitration,  which  yields  a  binding and enforceable decision, or also
  provide an option for non-binding negotiation, conciliation or mediation;
  
• the  clause  should  be  signed  by  any  potential  parties  to  dispute  although non-necessary
  parties to the particular contract in question, e.g., third-party beneficiaries, subcontractors;
  
• a panel of one or three is to be selected and by whom;
  
• a general choice-of-law clause will govern the ADR proceeding;
  
•  to   include  the  place  where  the  ADR  proceeding  will  be  held  and  the  language  of  the
  proceeding;
  
• to  incorporate by reference any particular specialized protections, e.g., temporary restraining
  orders;
  
•  to  engage  the  services  of  a  particular  ADR  administration  services provider such as the
  American  Arbitration  Association  or  International  Tribunal  of  the  International  Chamber of
  Commerce;
  
• the  particular  qualifications  and  subject-matter expertise,  for instance,  of  the mediators or
  arbitrators.