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Contract Drafting_Seminar 7
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Dispute settlement clausesOutline:
- Recap of Dispute Settlement methods
- Dispute Settlement Clause
Elements of a good dispute settlement clause
o enforceability
o condition precedent
o clear and certain
o anticipation of problems
o preservation of relationship
More on ADR-clause
- Review of examples
Some words on Exam Preparation
Dispute settlement (DR) Methods.
- Judicial settlement (litigation)
- ADR mechanism:
1- Negotiation
Party one v party two try to reach a solution by themselves.
2- Mediation
A third party is involved (mediator), to assistant the parties to reach an agreement not
about who is wrong and right but rather to reach a solution for both. The mediator
should not decide but rather only advice. The time the parties do not reach any result
with help of the mediator, then we are in the lockdown, the costs are usually shared
between the two parties.
3- Conciliation
Settlement given by a conciliator, after considering the both positions of the parties
by the conciliator, and then and it’s up to the parties to decide to follow his settlement
and hence will be binding on them.
4- Arbitration
Can be more than one arbitrator, they are often expert in law, and sometimes it is
required by law from the arbitrator to be expert in a specific area of law.
5- Commission of inquiry/fact finding.
US international trade commission, an independent, nonpartisan, quasi-judicial
federal agency that fulfills a range of trade-related mandates. We provide high-
quality, leading-edge analysis of international trade issues to the President and the
1
, Dispute settlement clauses
Congress. The Commission is a highly regarded forum for the adjudication of
intellectual property and trade disputes.
6- Non-compliance procedures.
ADR clause:
1- Separability:
There is no link between the Arbitration clause and the contract itself, so in other
words if the contract becomes invalid, the Arbitration clause still valid and
enforceable.
The arbitration clause remains valid after the termination of the contract, but you may
emphasize:
“This clause shall survive termination of this agreement.”
The doctrine of separability is based on the principle of the autonomy of the parties
and the legal certainty.
2- ADR approaches:
a. Single-tiered approach:
o when you define which rules will be applied in case of disputes in regard of
the contract and how many arbitrators will be involved. So only one level.
o Example: “All disputes arising out of or in connection with this Contract,
including any question regarding its existence, validity or termination, shall
be finally settled under the rules of the London Court of International
Arbitration (Rules), by three arbitrators in accordance with the said Rules.”
b. Multi-tiered approach
o It defines two levels of resolving the dispute is that the parties must first try
to negotiate in good faith and in case it does not lead to any solution then
they go to the second level and which is the mediation.
o Example: “If any dispute arises out of or in connection with this agreement
or its formation, directors or other senior representatives of the parties with
authority to settle the dispute will, within [ ] days of a written request from
one party to the other, meet in a good faith effort to resolve the dispute.
o If the dispute is not wholly resolved at that meeting, the parties will attempt
to settle it by mediation in accordance with the CEDR Model Mediation
Procedure. Unless otherwise agreed between the parties within [ ] days of
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