2. 11 DRAFTING/NEGOTIATING A COST-EFFECTIVE ADR CLAUSE FOR COMMERCIAL AND INTERNATIONAL CONTRACTS IN 2012 Breakout Session # B06 Sandra K. Partridge, Vice President, American Arbitration Association Charles E. Rumbaugh, CPCM, Fellow Rumbaugh ADR Offices July 30, 2012 2:30-3:45

3. 22 DRAFTING/NEGOTIATING A COST-EFFECTIVE ADR CLAUSE FOR COMMERCIAL AND INTERNATIONAL CONTRACTS IN 2012 Overarching considerations in drafting an Alternative Dispute Resolution (ADR) clause for commercial/international transactions… –Parties amenable to ADR? –Culture/Relationship of the parties –Multi-step ADR process required/desirable –Control of the process/results –Enforceability

4. 3 DRAFTING/NEGOTIATING A COST-EFFECTIVE ADR CLAUSE FOR COMMERCIAL AND INTERNATIONAL CONTRACTS IN 2012 FACT: The median timeframe to try a civil case to in Federal Court is 23.2 months*. * Based on US Federal Court statistics for civil cases for the 12-month period ending March 31, 2011. ** Based on AAA commercial arbitrations awarded in 2011. But the median timeframe for an AAA commercial arbitration to be awarded is 7.3 months**. That’s less time spent, fewer costs and a faster resolution for all involved. 7.3months 23.2 months US Federal Courts

5. 4 DRAFTING/NEGOTIATING A COST-EFFECTIVE ADR CLAUSE FOR COMMERCIAL AND INTERNATIONAL CONTRACTS IN 2012 Scope of arbitration clause… –Standard AAA Clause “Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the AAA under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in court having jurisdiction thereof.”

6. 5 DRAFTING/NEGOTIATING A COST-EFFECTIVE ADR CLAUSE FOR COMMERCIAL AND INTERNATIONAL CONTRACTS IN 2012 Scope continued… –Self-enforcing or “agreement-to-agree” –Timeframe for (expedited) actions –Broad verses Narrow range/nature of disputes –Evergreen ADR clause and/or reopener –Entire supply chain/flowdown and out Class actions/consolidation of claims –All disputes arbitrable…who decides arbitrability –Limiting scope confines the power of the arbitrator

7. 6 DRAFTING/NEGOTIATING A COST-EFFECTIVE ADR CLAUSE FOR COMMERCIAL AND INTERNATIONAL CONTRACTS IN 2012 Applicable Rules –Impact due to dollar value of demand –Expedited Rules –Desired changes to rules and Revised Rules Selection of arbitrators –Party appointed arbitrators –Ethical Rules –Compensation/Deposits –One Arbitrator or three? You decide…

8. 7 DRAFTING/NEGOTIATING A COST-EFFECTIVE ADR CLAUSE FOR COMMERCIAL AND INTERNATIONAL CONTRACTS IN 2012 2010-11 AAA LCC Cases

9. 8 DRAFTING/NEGOTIATING A COST-EFFECTIVE ADR CLAUSE FOR COMMERCIAL AND INTERNATIONAL CONTRACTS IN 2012 2010-11 AAA LCC Cases

10. 9 DRAFTING/NEGOTIATING A COST-EFFECTIVE ADR CLAUSE FOR COMMERCIAL AND INTERNATIONAL CONTRACTS IN 2012 Significant Procedural Issues… –Venue… Who decides Arbitrators’ Roster –Timeframes for actions –Emergency (Injunctive) Relief Within the US Internationally

11. 10 DRAFTING/NEGOTIATING A COST-EFFECTIVE ADR CLAUSE FOR COMMERCIAL AND INTERNATIONAL CONTRACTS IN 2012 Discovery limitations… –Interrogatories/depositions –Set times to complete –Set number permitted Choice of Law –Local law and Federal Arbitration Act (FAA) –Different than Locale

12. 11 DRAFTING/NEGOTIATING A COST-EFFECTIVE ADR CLAUSE FOR COMMERCIAL AND INTERNATIONAL CONTRACTS IN 2012 Reasoned award –Whose award is it? Avoidance Attorney fees/costs reimbursed –Definition of a prevailing party –Other…

13. 12 DRAFTING/NEGOTIATING A COST-EFFECTIVE ADR CLAUSE FOR COMMERCIAL AND INTERNATIONAL CONTRACTS IN 2012 Resources –American Arbitration Association, www.adr.orgwww.adr.org “Dispute-Wise” entities –International Institute for Conflict Prevention & Resolution (CPR), http://www.cpradr.org/http://www.cpradr.org/ –The New York Convention or “Convention on the Recognition and Enforcement of Foreign Arbitral Awards,” http://www.uncitral.org/pdf/english/texts/arbitration/NY- conv/XXII_1_e.pdfhttp://www.uncitral.org/pdf/english/texts/arbitration/NY- conv/XXII_1_e.pdf

14. 13 DRAFTING/NEGOTIATING A COST-EFFECTIVE ADR CLAUSE FOR COMMERCIAL AND INTERNATIONAL CONTRACTS IN 2012 Resources continued… –“Having Trouble Getting to the Negotiation Table? Try Baseball Arbitration,” www.Rumbaugh.netwww.Rumbaugh.net –Federal Arbitration Act (9 USC Sect. 1 et seq) –Armed Services Board of Contract Appeals, http://www.asbca.mil/ADR/adr.html http://www.asbca.mil/ADR/adr.html –Air Force ADR website, http://www.adr.af.mil./http://www.adr.af.mil./ –Other

15. 14 DRAFTING/NEGOTIATING A COST-EFFECTIVE ADR CLAUSE FOR COMMERCIAL AND INTERNATIONAL CONTRACTS IN 2012 Questions?

16. 15 DRAFTING/NEGOTIATING A COST-EFFECTIVE ADR CLAUSE FOR COMMERCIAL AND INTERNATIONAL CONTRACTS IN 2012 Sandra K. Partridge, Esq. PartridgeS@adr.org 212.484.4084 Charles E. Rumbaugh, Esq. ADROffice@Rumbaugh.net 310.373.1981