Cristina Rodriguez of Wolfe Pincavage. Courtesy photo

• What are important considerations when drafting an arbitration clause that are often forgotten?

Arbitration clauses are not one-size-fits-all. While standard clauses are a great starting point, personalized clauses require attention to the specific circumstances and interests of the parties, the business relationship, and the transaction(s). Careful attention to the drafting of dispute clauses in contracts is an important factor in tailoring the process to meet each business' unique needs.

As a tactic to preserve business relationships, companies should consider including a mandatory mediation clause as a pre-condition to arbitration. This creates an additional opportunity to communicate and helps avoid the time, expense, and risk associated with becoming adversaries. It is critical to streamline the process for selecting a qualified neutral and provide a time limit for conducting the mediation.

While effective arbitration clauses must be clear, too much specificity can be problematic. For example, if parties impose too many requirements for panel members, the parties may end up with too-narrow a pool of potential neutrals. Likewise, if parties create a detailed schedule with tight deadlines to promote a speedy resolution, they may end up with an unworkable process.