The following clauses can be incorporated in (international) business agreements at the time when the contracts are drafted and signed to take care of disagreements that might arise later.
Since all options refer to the procedural rules of SmartArb, parties are strongly encouraged to review those rules on our website in their current format before making their choice.
Ex Ante Option 1: Stand-Alone SmartArb Assisted Mediation Services
This option provides for mediation as a discreet process and leaves it to the parties to select arbitration or litigation with different neutrals or judges if the mediation should not render a satisfactory solution to the dispute. Highly qualified mediators are able to settle a remarkable percentage of all (commercial) disputes, as long as the parties are acting in good faith and have an interest in continuing their business relationship.
“In case of a disagreement arising out of the present contract or the underlying business transaction, the parties shall attempt in good faith to settle their dispute by mediation administered by the International Smart Mediation and Arbitration Institute (SmartArb) before resorting to litigation, arbitration, or some other method of dispute resolution.
Ex Ante Option 2: Separate Institutional Mediation and Arbitration Using SmartArb Services
Parties should consider this option, if they want a traditional mediation like in option 1 but also want the assurance that they can go to arbitration in case the mediation fails and will not have to litigate abroad. The mediation and arbitration procedures will be conducted independently and with different neutrals to preserve maximum confidentiality of the mediation attempts.
“In case of a disagreement arising out of the present contract or the underlying business transaction, the parties shall attempt in good faith to settle their dispute by mediation administered by the International Smart Mediation and Arbitration Institute (SmartArb). If a settlement to the full satisfaction of all sides is not accomplished within 60 days of initiation of mediation procedures, either party is free to demand arbitration administered by SmartArb regarding any unresolved controversies. Except to pursue a provisional remedy that is authorized by law and unavailable from the arbitrator, neither side shall resort to litigation.”
Ex Ante Option 3: Connected Institutional MedArb Using SmartArb Services
By contrast to options 1 and 2, the following clause allows a mediator to change roles and take on the decision-making powers of an arbitrator if the parties should not be able to settle their dispute via mediation. There are efficiencies in using the same person, who already became familiar with the case during mediation, as the final arbiter. However, the fact that a mediator may obtain decision-making powers later in the procedure can also change the dynamics of the mediation.
“In case of a disagreement arising out of the present contract or the underlying business transaction, the parties shall attempt in good faith to settle their dispute by mediation administered by the International Smart Mediation and Arbitration Institute (SmartArb). If a settlement to the full satisfaction of all sides is not accomplished within 60 days of initiation of mediation procedures, either party is free to demand arbitration administered by SmartArb regarding any unresolved controversies. Except to pursue a provisional remedy that is authorized by law and unavailable from the arbitrator, neither side shall resort to litigation. To the extent the parties do not agree otherwise, the mediator shall take on the role of arbitrator.”
Ex Ante Option 4: Institutional Arbitration Using SmartArb Services
If parties do not think that mediation can resolve a dispute – in particular if it is not clear that both sides have a strong interest in a long-term business relationship – the following clause directs them to go straight to arbitration to obtain a binding and final decision that can be en- forced, if necessary:
“Any dispute arising out of this contract or the underlying business transaction shall be resolved exclusively by arbitration administered by the International Smart Mediation and Arbitration Institute (SmartArb).”
Optional additions:
Ex Ante Option 5: Expert Determination Using SmartArb Services
If parties want to obtain a binding decision from an industry insider rather than a lawyer, they can select this option instead of arbitration:
“Any dispute arising out of this contract or the underlying business transaction shall be resolved exclusively and finally by an expert agreed upon between the parties. If the parties cannot agree on an expert within 30 days of the initiation of proceedings, either side may call upon the Secretary General of the International Smart Mediation and Arbitration Institute (SmartArb) for the appointment of an expert with demonstrated experience in the respective industry. To the extent the parties do not agree otherwise, the expert determination shall be conducted pursuant to the expert determination rules of SmartArb. The parties agree that the final decision of the expert shall have the force of law and be enforceable in court for and against either side.”
Ex Ante Option 6: Ad Hoc MedArb Using SmartArb Rules
Ad hoc procedures are administered by the parties themselves without the systematic involve- ment of an ADR institution. In principle, the parties to a commercial dispute can not only select the place, the language, and any neutrals they want, they can also design their own procedural and substantive rules, as long as they agree between themselves. Ad hoc ADR is usually cheaper and more flexible than institutional ADR. However, since party agreement may not always be forthcoming, once a dispute has arisen, it is wise to include a back-up plan in a dispute settlement clause:
“In case of a disagreement arising out of the present contract or the underlying business transaction, the parties shall attempt in good faith to settle their dispute by party-administered mediation. If the parties cannot agree on a mediator within 30 days of the initiation of proceedings, either side may call upon the Secretary General of the International Smart Mediation and Arbitration Institute (SmartArb) for the appointment of a qualified mediator. To the extent the parties do not agree otherwise, the mediation shall be conducted pursuant to the mediation rules of SmartArb.
If a settlement to the full satisfaction of all sides is not accomplished within 60 days of initiation of mediation procedures, either party is free to initiate party- administered arbitration regarding any unresolved controversies. Except to pursue a provisional remedy that is authorized by law and unavailable from the arbitrator, neither side shall resort to litigation. To the extent the parties do not agree other- wise, the mediator shall take on the role of arbitrator and the arbitration shall be conducted pursuant to the arbitration rules of SmartArb in whatever form is current at the time of the initiation of arbitration proceedings.”
Ex Ante Option 7: Ad Hoc Arbitration Using SmartArb Rules
The final option is similar to option 6, except that it dispenses with mediation attempts and directs the parties to go straight to arbitration to obtain a final and binding decision:
“Any dispute arising out of this contract or the underlying business transaction shall be resolved exclusively by arbitration administered by the parties themselves (ad hoc arbitration).
[Alternative 1: If the parties can agree on a sole arbitrator, the arbitration shall proceed accordingly. If agreement is not forthcoming within 30 days, each side nominates one arbitrator and the two shall then agree on the presiding arbitrator.] [Alternative 2: If the parties can agree on a sole arbitrator, the arbitration shall proceed accordingly. If agreement is not forthcoming within 30 days of initiation of proceedings, either side may call upon the Secretary General of SmartArb for the appointment of a qualified arbitrator.]
The seat of the arbitration shall be [...].
The language of the arbitration shall be [...].
To the extent the parties do not agree otherwise, the arbitration shall be conducted pursuant to the arbitration rules of the International Smart Mediation and Arbitra- tion Institute (SmartArb) in whatever form is current at the time of the initiation of arbitration proceedings.”
The following are short and basic agreements which can be entered into by parties to an (international) business transaction if a disagreement has arisen that does not seem to be reconcilable in bilateral negotiations between the parties. Such an agreement would override any dispute settlement clauses that may have been incorporated in the original contracts or it can substitute for the lack of dispute settlement clauses in the original contracts. All of the agreements suggested below include the involvement of a neutral third party as facilitator, mediator, or arbitrator, to help the business partners overcome their disagreement and, hopefully, enable the resumption of mutually beneficial business relations. Any selection from the list below can evolve by mutual agreement as the settlement procedures themselves evolve.
Since all options refer to the procedural rules of SmartArb, parties are strongly encouraged to review those rules on our website in their current format before making their choice.
Ex Post Option 1: Stand-Alone SmartArb Assisted Mediation Services
“We hereby agree to submit the following controversy to confidential mediation administered by the International Smart Mediation and Arbitration Institute (SmartArb): [short description of dispute]”
Optional Additions:
Ex Post Option 2: Separate Institutional Mediation and Arbitration Using SmartArb Services
“We hereby agree to submit the following controversy to confidential mediation
administered by the International Smart Mediation and Arbitration Institute (SmartArb): [short description of dispute].
If a settlement to the full satisfaction of all sides is not accomplished within 60 days of initiation of mediation procedures, either party is free to demand arbitration administered by SmartArb regarding any unresolved controversies. Except to pursue a provisional remedy that is authorized by law and unavailable from the arbitrator, neither side shall resort to litigation.”
Optional Additions:
Ex Post Option 3: Connected Institutional MedArb Using SmartArb Services
“We hereby agree to submit the following controversy to confidential mediation administered by the International Smart Mediation and Arbitration Institute (SmartArb): [short description of dispute].
If a settlement to the full satisfaction of all sides is not accomplished within 60 days of initiation of mediation procedures, either party is free to demand arbitration administered by SmartArb regarding any unresolved controversies. Except to pursue a provisional remedy that is authorized by law and unavailable from the arbitrator, neither side shall resort to litigation. To the extent the parties do not agree otherwise, the mediator shall take on the role of arbitrator.”
Optional Additions:
Ex Post Option 4: Institutional Arbitration Using SmartArb Services
“We hereby agree to submit the following controversy to arbitration administered by the International Smart Mediation and Arbitration Institute (SmartArb): [short description of dispute].”
Optional additions:
Ex Post Option 5: Expert Determination Using SmartArb Services
“We hereby agree to submit the following controversy to expert determination administered by the International Smart Mediation and Arbitration Institute (SmartArb): [short description of dispute].”
Optional additions:
Ex Post Option 6: Ad Hoc MedArb Using SmartArb Rules
“We hereby agree to submit the following controversy to party-administered or ad hoc mediation: [short description of dispute].
To the extent the parties do not agree otherwise, the mediation shall be conducted pursuant to the mediation rules of the International Smart Mediation and Arbitration Institute (SmartArb).
If a settlement to the full satisfaction of all sides is not accomplished within 60 days of initiation of mediation procedures, either party is free to initiate party- administered arbitration regarding any unresolved controversies. Except to pursue a provisional remedy that is authorized by law and unavailable from the arbitrator, neither side shall resort to litigation. To the extent the parties do not agree otherwise, the mediator shall take on the role of arbitrator and the arbitration shall be conducted pursuant to the arbitration rules of SmartArb in whatever form is current at the time of the initiation of arbitration proceedings.”
Optional Additions:
Ex Post Option 7: Ad Hoc Arbitration Using SmartArb Rules
“We hereby agree to submit the following controversy to party-administered or ad hoc arbitration: [short description of dispute].
The arbitration shall be conducted pursuant to the arbitration rules of the Interna- tional Smart Mediation and Arbitration Institute (SmartArb) in their current form. We agree that [name] shall serve as our arbitrator.
[Alternative 1: If we can agree on a sole arbitrator, the arbitration shall proceed accordingly. If agreement is not forthcoming within 30 days, each side nominates one arbitrator and the two shall then agree on the presiding arbitrator.]
[Alternative 2: If we can agree on a sole arbitration, the arbitration shall proceed accordingly. If agreement is not forthcoming within 30 days of initiation of proceedings, either side may call upon the Secretary General of SmartArb for the appointment of a qualified arbitrator.]
The seat of the arbitration shall be [...].
The language of the arbitration shall be [...].”