1. Sample Dispute Resolution Clause for Agreements (with IP Clause)

a. Negotiation
b. Mediation
c. Arbitration
d. Intellectual Property Rights
e. Award
f. Modification of Agreement
g. Governing Law
h. Confidentiality

2. Broad Applicability Clause?

a. The arbitration part of the ADR clause can be drafted any way that is desired. Some types of disputes can be excluded from arbitration, and the clause can provide an option of going to court for interim relief or for specific types of claims.

b. However, if a broad arbitration clause is desired, it can be useful to also include matters that might be challenged in court by the other side. Even if the applicable rules say that an arbitrator can decide the arbitrator’s jurisdiction over claims and parties, that might not stop a party from going to court to argue that the rules do not apply to that party. To reduce the risk of ancillary litigation delaying the arbitration, I recommend inserting the following language:

Any dispute arising out of or related to this Agreement or the breach thereof, including issues of (i) inducement, formation, or validity of the Agreement or this clause, (ii) whether a party is subject to the Agreement or to jurisdiction of an arbitral tribunal, and (iii) whether an issue is within the scope of this clause or within jurisdiction of an arbitral tribunal, shall be resolved as follows:

3. Negotiation

a. Friendly negotiations. Culturally required anyway?
b. Allow use of a representative in the other country?
c. Exception for emergencies and matters requiring immediate relief.
d. Time limits: earlier of x sessions or y days.
e. Right to initiate mediation.

4. Mediation

a. Location.
b. Reference to applicable mediation or conciliation law.
c. Preselection of mediator or method of selection? Mediator familiarity with the subject matter? Use of co-mediators?
d. Allocation of mediator and other fees.
e. Who must participate?
f. Specific confidentiality provision.
g. Specific privilege provision also, if outside the U.S. (Note: provides intent, not enforceability.)
h. Deadlock or time limit, then right to arbitrate.

5. Arbitration

a. Location and language (if outside the U.S.).
b. Reference to applicable administering authority and (specialized) arbitration rules.
c. Supplemental rules and laws (e.g. IBA Rules, FAA, State Statute).
d. One or three arbitrators?
e. Arbitrator experience in the subject matter?
f. What discovery should be allowed?
g. Allocation of administrative, arbitrator and attorney’s fees, and whether mediation fees are recoverable.

6. IP Rights and Remedies

a. Limitations on arbitrator to rule on validity and infringement but allow ruling on enforceability under the facts determined by the arbitrator.
b. Possibly allow the arbitrator to consider and express a nonbinding view and the reasons for that view on validity and infringement.
c. Allow factual determinations solely with respect to the parties as may be necessary to support an award.
d. Allow equitable relief and damages as befit the circumstances.
e. State whether punitive damages may be awarded and any limitations on other damages.

7. Award

a. Will state the acts, if any, a party is to undertake with respect to both the claims and the other party.
b. The amount of monetary award, if any, and the currency in which it is awarded, which is to be the currency most applicable to the transaction or claim.
c. Address pre and post-award interest, time for payment.
d. Whether the award is to be a standard award, reasoned award or to include Findings of Fact and Conclusions of Law (not recommended).
e. Confidentiality of award findings and reasoning; allow filing the effective award: the action and payment obligations of the parties with appropriate redactions to protect confidential portions.

8. Modification of Agreement

a. If there is a continuing relationship, the terms of the award are to be incorporated in the Agreement.
b. Effective date; treat as an amendment.
c. State whether controlling on other entities and controlling persons.
d. State that it is not to be regarded or asserted by any party as having any effect on any other person or entity not within the affected persons list.

9. Governing Law; Enforcement

a. Governing law clause.
b. Consent to personal jurisdiction and venue of the courts sitting in the situs of the arbitration.
c. Allow enforcement in those courts and anywhere else where jurisdiction may be obtained over the other party or affected property.
d. Allow provisional relief, injunctive relief, collection of amounts due, registration of the award in those courts.

10. Practice Tips

a. The dispute resolution clause should be applicable to all officers, agents and controlling persons of the other party, especially for licensees.
b. Have controlling persons sign the Agreement acknowledging applicability to them of the dispute resolution clause.
c. Take advantage of the NY Convention to enforce arbitration awards in other countries.
d. If enforcement might be necessary in a different country, do not first turn the award into a judgment in the country in which the award is obtained as it may create a merger problem.
e. Begin enforcement in other countries before confirmation of the award but be sure to confirm the award before any statutory confirmation deadline.