Business Law Spring Meeting offers hints on how to write dispute resolution clauses in business contracts

"Dispute resolution planning involves creating a framework to anticipate, avoid and manage disputes," reads the CPR Master Guide: Drafting Dispute Resolution Clauses. "Drafting Dispute Resolution Clauses That Work for Your Corporate Clients," a continuing legal education program offered at the 2007 Spring Meeting of the Section of Business Law, discussed how to write workable pre-dispute resolution clauses for your business clients.

Multi-step alternative dispute resolution clauses, explained panelist F. Peter Phillips of CPR International Institute for Conflict Prevention and Resolution in New York, generally provide for dispute resolution to proceed from either negotiation to mediation to litigation, or from negotiation to mediation to arbitration. Multi-step clauses initiate person-to-person contact and makes negotiation more systematic. Phillips continued by pointing out special drafting issues to multi-step ADR clauses: "Make sure you have default rules and procedures in place." Build into the contract timing and trigger mechanisms for moving on to the next step. The CPR Institute is a non-profit educational organization that now includes some 400 corporate law departments, law firms, academics and agencies.

Phillips offered a contract clause hypothetical that he used to explain his drafting points. "The parties agree to submit any controversy arising out of, or in connection with, this contract to good faith negotiations, except that the parties may immediately submit any claim related to confidentiality provisions or intellectual property rights set forth in this agreement to judicial proceedings." On the surface, this does not sound like an uncommon clause, said Phillips. However, there is no initiation trigger that states when and how in the phrase, "parties agree to submit any controversy… to… negotiations."

Karol K. Denniston, DLA Piper US LLP, served as moderator for the panel. Other speakers included Edward B. Schwartz of DLA Piper; Alan S. Kaplinsky, Ballard Spahr Andrews & Ingersoll, LLP; David M. S. Shaiken, Reid and Riege, P.C.; and David Stratton, Pepper Hamilton, LLP.

Among other issues discussed were preserving the value of the deal, carve-out clauses and, more specifically, ADR clauses in bankruptcy cases. The Business Law Section has posted extensive materials [PDF] from the "Drafting Dispute Resolution Clauses That Work for Your Corporate Clients" session.

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