Drafting clear, unambiguous clauses contributes to the efficiency of the ADR process. For example, arbitration agreements require a clear intent to arbitrate. It is not enough to state that “disputes arising under the agreement shall be settled by arbitration.” While that language indicates the parties’ intention to arbitrate and may authorize a court to enforce the clause, it leaves many issues unresolved. Issues such as when, where, how and before whom a dispute will be arbitrated are subject to disagreement once a controversy has arisen, with no way to resolve them except to go to court.
Some of the more important elements a practitioner should keep in mind when drafting, adopting or recommending a dispute resolution clause follow.
• The clause might cover all disputes that may arise, or only certain types.
• It could specify only arbitration – which yields a binding decision – or also provide an opportunity for non-binding negotiation or mediation.
• The arbitration clause should be signed by as many potential parties to a future dispute as possible.
• To be fully effective, “entry of judgment” language in domestic cases is important.
• It is normally a good idea to state whether a panel of one or three arbitrator(s) is to be selected, and to include the place where the arbitration will occur.