Some Ways to Put It in Writing
Include these sample ADR clauses in your contracts, and steer clear of the courts
If you want to avoid going to court to settle contract disputes, your best bet is to specify the use of alternative dispute resolution in your contracts up front. To help, we've listed a few standard clauses below (they are from a selection of the arbitration companies listed in the related table, "Neutral Ground"). Of course, be sure to review any such clause with your lawyers before inserting it into a contract.
United States Arbitration & Mediation
In the event a dispute shall arise between the parties to this (contract, lease, etc.), it is hereby agreed that the dispute shall be referred to United States Arbitration & Mediation for arbitration in accordance with the Arbitration Rules of United States Arbitration & Mediation. The arbitrator's decision shall be final and binding, and judgment may be entered thereon.
CPR Institute for Dispute Resolution
Abbreviated Clauses for Standard Business Agreements
The parties shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly by negotiation between executives.
The parties shall endeavor to resolve any dispute arising out of or relating to this Agreement by mediation under the CPR Mediation Procedure. Unless otherwise agreed, the parties will select a mediator from the CPR Panels of Distinguished Neutrals.
Mediation, with Arbitration if Necessary
The parties shall endeavor to resolve any dispute arising out of or relating to this agreement by mediation under the CPR Mediation Procedure. Unless the parties agree otherwise, the mediator will be selected from the CPR Panels of Distinguished Neutrals. Any controversy or claim arising out of or relating to this contract or the breach, termination or validity thereof, which remains unresolved 45 days after appointment of a mediator, shall be settled by arbitration by [a sole] [three] arbitrators in accordance with the CPR Rules for Non-Administered Arbitration, and judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof.
Any controversy or claim arising out of or relating to this contract or the breach, termination or validity thereof, shall be settled by arbitration by [a sole] [three] arbitrator(s) in accordance with the CPR Rules for Non-Administered Arbitration, and judgment upon the award
National Arbitration & Mediation
Model Contract Provision
Any dispute, controversy or claim arising out of or in connection with or relating to this Agreement, its formation or any breach or alleged breach hereof, shall be determined and settled by arbitration in the City and State of New York conducted by an arbitrator selected by NAM from the panel of Hearing Officers maintained by NAM. The arbitration shall be conducted pursuant to the then existing rules, regulations, practices and procedures of NAM. Any decision rendered by the arbitrator shall be final, conclusive and binding upon the parties to the arbitration and may be enforced by the judgment and order of any court having competent jurisdiction. The party first submitting the dispute to arbitration shall pay the full administrative fee (for each party to the dispute) and shall be responsible for the total cost of the arbitrator's time, and any cancellation, adjournment, settlement, and/or other standard administrative fees. All fees will be in accordance with the NAM fee schedule in effect at the time of the filing. The arbitrators shall have the right to award a party recovery of all costs relating to the arbitration including, without limitation, the above mentioned fees and costs, as well as reimbursement of legal fees and expenses.
This article was originally published in the October 12, 1998 print edition of Business Week's Enterprise. If you would like to become a subscriber, please read our subscription policy.
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TABLE: Neutral Ground