Non-Administered International Arbitration

A. Pre-Dispute Clause

“Any dispute arising out of or relating to, this contract, including the breach, termination or validity thereof, shall be finally resolved by arbitration in accordance with the International Institute for Conflict Prevention and Resolution Rules for Non-Administered Arbitration of International Disputes, by (a sole arbitrator) (three arbitrators, of whom each party shall appoint one) (three arbitrators, none of whom shall be appointed by either party). Judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof. The seat of the arbitration shall be (city, country). The arbitration shall be conducted in (language). The Neutral Organization designated to perform the functions specified in Rules 5, 6 and 7 shall be (name of CPR or other organization).“

B. Existing Dispute Submission Agreement

“We, the undersigned parties, hereby agree to submit to arbitration in accordance with the International Institute for Conflict Prevention and Resolution Rules for Non-Administered Arbitration of International Disputes (the “International Rules“) the following dispute:

[Describe briefly]

We further agree that the above dispute shall be submitted to (a sole arbitrator) (three arbitrators, of whom each party shall appoint one) (three arbitrators, none of whom shall be appointed by either party). We further agree that we shall faithfully observe this agreement and the International Rules and that we shall abide by and perform any award rendered by the arbitrator(s). Judgment upon the award may be entered by any court having jurisdiction thereof. The seat of the arbitration shall be (city, country). The arbitration shall be conducted in (language). The Neutral Organization designated to perform the functions specified in Rules 5, 6 and 7 shall be (name of CPR or other organization).“

C. CPR International Model Multi-step Dispute Resolution Clause

Article _______________

Any dispute arising out of or relating to this Agreement, including the breach, termination, validity, interpretation and performance thereof (“Dispute”)[1] shall be resolved in accordance with the procedures specified in this Article 00, which shall be the sole and exclusive procedures for the resolution of any such Dispute.

(A) Negotiation

The parties shall attempt 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.

(B) Mediation

If the Dispute has not been resolved by negotiation in accordance with paragraph (A) within 50[2] days after delivery of the Notice, [or if the parties failed to confer within 40 days after delivery of the Notice], [or if the party receiving the Notice failed to submit to the other a written response within 20 days after delivery of the Notice], [or at any time if one party expressly refuses to participate in the negotiation in accordance with paragraph (A)[3], then the parties shall endeavor to settle the Dispute by mediation under the CPR Mediation Procedure [Or: the CPR European Mediation Procedure (1996)] then currently in effect [Or: in effect on the date of this Agreement[4]. Unless otherwise agreed, the parties will select a mediator from the CPR Panels of Distinguished Neutrals [and, if they require it, shall notify CPR to initiate a selection process].

If the Dispute has not been resolved by mediation within 35[5] days after appointment of the mediator, [or at any time if one party expressly refuses to participate in the negotiation or mediation in accordance with paragraphs (A) and (B)[6], then either party may[7] submit the Dispute to arbitration as the exclusive means of resolving it in accordance with paragraph (C). All communications during the negotiation and mediation pursuant to paragraphs (A) and (B) are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence and any additional confidentiality and professional secrecy protections provided by applicable law.[8]

(C) Arbitration

Any Dispute not resolved through negotiation or mediation in accordance with paragraphs (A) and (B) shall be finally resolved by arbitration in accordance with the CPR Rules for Non-Administered Arbitration of International Disputes then in effect [Or: in effect on the date of this Agreement[9] by three arbitrators, one appointed by each of the parties, and the third arbitrator who shall act as chair of the Tribunal [Or: a sole arbitrator] [Or: three arbitrators not appointed by the parties[10]. The arbitration shall be held in [city, state, country]. The arbitration proceedings shall be conducted in the [specify] language. Notwithstanding any other provision in this Agreement, the law governing this arbitration agreement and the arbitration proceedings shall be the arbitration law of the place of arbitration.[11] Judgment upon the award may be entered by any court having jurisdiction thereof.

As is the case with any dispute resolution clause, this multi-step clause could include additional paragraphs, covering questions such as provisional remedies, interim relief, tolling of statute of limitations, issues of continued performance, and right of termination.


1 In international cases with proceedings outside of the U.S., it is advisable not merely to rely on the comparatively firm U.S. case law on the shorter “any dispute arising out of or relating to this Agreement,” but additionally to spell out the full array of possible controversies.

 

2 Cf. fn. 2 supra. For this time period, CPR’s domestic multi-step clause suggests 45 days, and its international clauses suggest 60 days. If the negotiation procedure under paragraph (A) were to include the optional requirement of a second layer of negotiations by “more senior executives,” this cut-off date should be delayed to 60 days.

3 Unlike CPR’s existing domestic multi-step clause, the draft international clause allows either party to opt out (by way of express refusal to participate) and to take the dispute directly to arbitration. Under the existing clause, in the event that one party fails to participate, only the other party can accelerate the proceedings. Further, the draft clause’s standard “expressly refuses to participate” removes much of the ambiguity of, and is thus preferable to, the standard “fails to participate” in the existing clause.

4 “In effect” is preferable because it is unlikely that parties would want a mediation, for example, in 2005 conducted under procedural rules that were in effect but replaced, for example, in 1994. The old rules were presumably replaced for a good reason. In addition, it is generally accepted that the retroactive application of procedural rules (as opposed to substantive law rules) does not create a due process issue.

5 Cf. fn. 2 supra. CPR’s domestic multi-step clause suggests 30 days for this time period, and its international clauses suggest 45 days.

6 Cf. fn. 6 supra.

7 The combination of “may” in paragraph (B) and “shall” in the introduction to paragraph (C) is intended to eliminate the problem that, because parties occasionally do not want to infer that a dispute that cannot be settled by negotiation and mediation “must” be arbitrated, the formulation “may” alone is chosen (which can have the unintended side-effect to make the clause ambiguous as to whether arbitration is the exclusive dispute resolution mechanism).

8 Different from what is the case in CPR’s existing multi-step clause, this paragraph should relate to, and thus protect, both the negotiation and mediation step.

9 Cf. fn. 7 supra.

10 The CPR International Rules, in their Article 5.1, distinguish between these three kinds of tribunals.

11 Although this sentence is merely declaratory, it may help to prevent the losing party from attempting to have the award set aside in any other country but the country where the award was rendered.

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