NAFTA Committee on Private Commercial Disputes Houston Meeting June 15, 2010

2 Pathological Clauses Definition — provisions that may cause the arbitration agreement to fail, or may result in litigation with increased costs and delays Simplify Safe haven — arbitral institutions’ model arbitral clauses

3 Pathological Clauses Typical Mistakes Failure to specify arbitration as the means to resolve the dispute Failure to specify the arbitral institution correctly Failure to specify a time limit for negotiations or mediation in a tiered clause or state when a condition precedent will be satisfied Specifying a time limit for the conclusion of the arbitration that is too short Specifying arbitrator qualifications that are too specific and too difficult to satisfy Creating conflicts in the procedural rules

4 Pathological Clauses Inadvertently limiting the subject matter of arbitration (e.g., arbitration over the applicable law) Different contracts involving the same project with differing arbitration clauses but overlapping disputes Overlapping disputes for expert determination and arbitration under the same contract Baseball arbitration clauses Governing law clause calls for different law to different issues