Two-Stage Domestic Arbitration

DOMESTIC DISPUTES ENDING IN ARBITRATION [HIGHLIGHTED TEXT INDICATES CHOICES TO BE MADE BY THE USER.]

3. Two-Stage Process: Negotiation, Arbitration

a. Negotiation Between Executives The parties shall attempt in good faith to resolve any dispute arising out of or relating to this [Agreement] [Contract] promptly by negotiation between executives who have authority to settle the controversy and who are at a higher level of management than the persons with direct responsibility for administration of this contract. To initiate a negotiation, a party shall give the other party written notice of any dispute not resolved in the normal course of business. Within [30] days after delivery of the notice, the executives of both parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to attempt to resolve the dispute. All negotiations pursuant to this clause are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence.

¹ Arbitral panels generally consist of one or three arbitrators. Often, parties to a large or complex dispute provide for a panel of three arbitrators because they believe that three arbitrators will have a broader experience base and be less likely to render an irrational award. (Note that CPR Arbitration Rules address this issue by requiring reasoned awards made in accordance with governing law.) Choosing three arbitrators rather than one increases cost. Consider providing for a sole arbitrator if a dispute is below a certain monetary amount, and for three arbitrators if above that amount. ² Note: The place of arbitration can impact arbitral proceedings. b. Arbitration Any dispute arising out of or relating to this [Agreement] [Contract], including the breach, termination or validity thereof, which has not been resolved negotiation as provided herein within [45] days after the executives of both parties first meet (unless the parties mutually agree in writing to extend the time), shall be finally resolved by arbitration in accordance with the International Institute for Conflict Prevention & Resolution Rules for Administered Arbitration [currently in effect OR in effect on the date of this Agreement], by [a sole arbitrator] [three independent and impartial arbitrators1] to be appointed by CPR; [provided, however, that if one party fails to participate in the negotiation as agreed herein, the other party can commence arbitration prior to the expiration of the time periods set forth above.] The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§1 et seq., and judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof. The place of arbitration shall be (city, state2).

IF THE PARTIES WANT TO PROVIDE FOR AN APPELATE PROCEDURE, ADD THE FOLLOWING PARAGRAPH:

An appeal may be taken under the CPR Arbitration Appeal Procedure from any final award of an arbitral panel in any arbitration arising out of or related to this agreement that is conducted in accordance with the requirements of such Appeal Procedure. Unless otherwise agreed by the parties and the appeal tribunal, the appeal shall be conducted at the place of the original arbitration.