Introduction

Negotiation

Mediation

Arbitration

Optional Clauses

INTRODUCTION

It is a frequently stated principle in alternative dispute resolution literature that agreements ought to contain provisions dealing with the resolution of disputes. It is equally often stated that it is impossible to develop a clause of universal application.

Each agreement must address the specific circumstances of that agreement and those circumstances will dictate the processes which should be used in the event of a dispute.

Additional Resources

The Foundation's resource materials include a selection of precedent clause and other reference materials. Members are invited to avail of these materials.

NEGOTIATION

Sample Negotiation Clause

The parties agree that, both during and after the performance of the terms of the agreement each of them shall make bona fide efforts to resolve by negotiation any dispute between them.

Negotiation Clause - Two levels of management

In the event of a dispute under this Agreement (a "Dispute"), the party alleging the Dispute shall provide written notice giving particulars of the Dispute to the other party (the "Notice of Dispute"). The parties each agree to appoint a representative and to cause their respective representatives to meet as soon as possible in an effort to resolve the Dispute. Should the Dispute not be resolved within ten (10) Business Days of the Notice of Dispute, representatives of the parties at a senior management level shall attempt, in good faith, to resolve the Dispute in no more than thirty (30) Business Days from the date of the Notice of Dispute. All such representatives of the parties shall be referred to hereafter as "Settlement Nominees", and the thirty (30) Business Day period shall be referred to as the "Period of Discussion".

Stay of proceedings

[A party may not serve a Notice of Dispute or commence court proceedings / an arbitration until {21} days after it has made a request to the other side for negotiations.]

Notes:

Parties should consider:

• if there are any disputes which they do not wish to handle by negotiation;
• preservation of rights under appropriate limitations legislation;
• time limits within which negotiation is to commence;
• time limits within which negotiation may be seen to be concluded;
• if a next stage, such as mediation, is anticipated, whether to include a provision for disclosure, such as "provide frank, candid and timely disclosure of all relevant facts, information and documents to facilitate those negotiations";
• if a third party neutral is to be included in the negotiation process;
• confidentiality of the process;
• without prejudice nature of the process.

MEDIATION

Mediation Clause following negotiation

1. If the dispute is not resolved by informal negotiation within 30 days (or any mutually agreed extension of time) of the first meeting between the representatives of the parties, the dispute shall be referred to mediation, that is, an informal, non-binding conference or conferences between the parties in which a mediator will seek to guide the parties to a resolution of the dispute.
2. The parties are free to select any mutually acceptable mediator. If the parties cannot agree or have no particular choice of mediator, they may request that The Canadian Foundation for Dispute Resolution assign a mediator to the dispute. A list and resumes of available mediators, numbering one more than there are parties, will be sent by the Foundation to the parties, each of whom may strike one name, leaving the remaining name as the mediator. If more than one name remains, the designated mediator shall be selected by The Canadian Foundation for Dispute Resolution from the remaining names.
3. The mediation process shall continue until the case is resolved, one of the parties wishes to terminate the mediation, or the mediator makes a finding that there is no possibility of resolution.

Notes:

It is essential to:

• preserve rights with respect to limitation periods;
• provide a mechanism for selection of the mediator;
• know when the mediation process is concluded.

Parties should consider:

• what issues are being submitted to mediation;
• what disclosure is contemplated - clarify intentions.

Parties may wish to consider:

• any special qualifications required by the mediator;
• the mediation procedure;
• confidentiality of the mediation
• without prejudice nature of the mediation
• manner in which the costs are to be shared;
• including rules of mediation by reference - in which case it is essential to consider carefully whether modifications are necessary.

ARBITRATION

Arbitration Clause

All disputes [arising out of or in connection with this agreement, or in respect of any defined legal relationship associated therewith or derived therefrom] [related to the execution or performance of the agreement] shall be facilitated by, and finally resolved, pursuant to the Commercial Arbitration Rules of The Canadian Foundation for Dispute Resolution.

Notes:

Parties may wish to consider:

• a more narrowly worded or a more broadly worded clause
  • the clause set out above offers the option of a broad wording [arising out of or in connection with this agreement, or in respect of any defined legal relationship associated therewith or derived therefrom] or a more narrow wording [related to the execution or performance of the agreement]
  • the intent of the more narrow wording is to refer to arbitration only rights and obligations created by the agreement or disputes over the meaning or effect of the agreement
  • the intent of the broader wording is to include, in addition, claims or disputes arising out of the existence of a contractual obligation
• if very limited issues only are to go to arbitration, then the arbitration clause should specifically detail those limits
• by limiting the application of the clause, it is more likely that other issues may become the subject of litigation.

Parties should consider:

• mediation prior to arbitration;
• clearly stating the matters in dispute;
• the jurisdiction of the arbitrator;
• the qualifications of the arbitrator;
• the number of arbitrators;
• is the arbitration award binding;
• applicable law;
• arbitration procedures;
• the place of the arbitration;
• modification of Rules incorporated by reference;
• production of documents;
• time frame for award;
• how costs are to be dealt with;
• arbitrators' fees;
• variation of specific provisions of Arbitration Act;
• rights of appeal
  • parties may expand rights of appeal by specifying that the parties may appeal an award to the Court on a question of law, on a question of fact, or on a question of mixed law and fact. The review standard on appeal is 'Does the reviewing Court agree with the interpretation of the arbitrator?'
  • in the absence of such expanded wording, the parties may appeal an award to the Court on a question of law only with leave of the Court.

OPTIONAL CLAUSES

Court proceedings/Arbitration in parallel

The commencement of a mediation will not prevent the parties from commencing or continuing court proceedings / an arbitration.

Note: This provision will need to be modified where a provision in included requiring mediation before litigation/arbitration, except as necessary to preserve rights or deal with limitation periods.

Mediation in parallel

Any party which commences court proceedings / an arbitration must institute a mediation within [21] days after the delivery of the statement of defence/statement by the respondent in the arbitration proceedings, as applicable.

No further steps in legal proceedings

The parties undertake not to take any further steps in any legal proceedings regarding the issues being mediated while the mediation is in progress, unless the same are necessary to preserve rights.