How Can I Sign Iowa Banking Arbitration Agreement

Signature arbitration agreement template

great thank you thank you very much shannon barya and it's really a pleasure to be here and to be a part of cadron's online campaign uh during the course of this uh relatively brief presentation you know one key goal as shan mentioned is to help avoid a situation where your arbitration clause isn't defective and this may be the result of a situation that many of us have encountered in negotiating commercial contracts or maybe we've had to deal with this situation after the fact where in the final days or even the final hours before a deal closes or a contract is signed the parties or the lawyers turn their attention for the very first time to the dispute resolution provision of the contract and they may you know copy and paste a clause that looks good from another unrelated contract they may perhaps use a standard off-the-shelf clause that they've seen published somewhere and the problem with that approach is that by not paying sufficient attention to the arbitration clause or other dispute resolution provision and treating it almost as an afterthought the parties as john mentioned haven't selected or designed a provision that is likely to be effective that is likely to properly address the party's needs and the particular circumstances of the transaction at hand so then when a dispute ultimately arises in the party's commercial relationship and that midnight clause is put to the test the result may be a range of unintended consequences that are undesirable including uncertainty about how the dispute will be resolved and unnecessary delays in actually resolving the dispute with that said as we move on to discuss various aspects of effective arbitration clauses let's keep in mind that the fundamental purpose of any arbitration or other adr clause is to effectively resolve disputes and not create new ones so despite being one of the last things that the parties or their council may put into a contract the dispute resolution provision is very important and it can have profound impact on how a dispute is resolved and what the party's agreement is held to mean dispute resolution provision is important because among other things it reduces commercial uncertainty and unpredictability that can result from having multiple court proceedings and multiple fora and it can ensure that the parties have a neutral forum in which they can enforce their rights so having decided to include a dispute as a resolution provision in your contract you now have to decide what form will that provision take do you want a forum selection or choice of court clause in which you agree that all disputes will be resolved in courts of a particular jurisdiction or do you want an arbitration clause providing for all disputes or certain types of disputes to be resolved through binding arbitration now answering that question of arbitration versus litigation is a topic for another day but if i may summarize briefly especially in a cross-border context international arbitration can provide a neutral forum for disputes to be resolved through a relatively efficient and expeditious procedure that the parties can tailor to fit their needs and the needs of the transaction the parties can choose a tribunal with commercial expertise in the subject matter of the contract and international arbitration agreements and arbitral rewards are generally enforceable under the new york convention and many national laws with limited exceptions today we'll focus on the basic elements of an effective international arbitration agreement and while we can't generalize about what would make a perfect arbitration clause every transaction will cover the most important considerations when drafting an arbitration clause and equally importantly we'll talk about common mistakes to avoid the first and most fundamental point that i'll make here is that arbitration is a creature of contract and without an arbitration without an agreement that unequivocally commits the parties to binding arbitration to resolve their dispute there's effectively no arbitration agreement so if a dispute arises and one party then wishes to avoid arbitration or drag his feet perhaps you might have to detour through the courts before that dispute is finally resolved through arbitration so on the slide here you'll see a list of other key elements of an effective arbitration agreement and i'll talk briefly about each one in turn one of the more critical decisions in drafting an arbitration agreement is to select the seat or the legal place of the arbitration the orbital seat determines the applicable procedural law and has a number of important practical and legal implications some of the aspects of the arbitration that are affected by the choice of seat are listed here the seat is the only jurisdiction where court proceedings to a null or set aside the arbitral award can be brought given how consequential this is it's important to select a seat that has appropriate annulment provisions in its law and has courts that will not essentially relitigate the dispute after the arbitration and because the seat is the legal citizens of the arbitral reward it will define whether or not the award is subject to the convention on the recognition and enforcement of awards also called the new york convention which sets out a robust pro-enforcement regime courts at the arbitral seat can also in many cases provide ancillary support for the arbitral process as part of their supervisory jurisdiction over the arbitration this includes for example appointing arbitrators or considering challenges to arbitrators in some cases now when you are drafting an arbitration clause and trying to think about you know think ahead to what a potential arbitration would be like it's important to keep in mind that the seat of the arbitration does not necessarily have to be the physical or geographic location where the hearings take place and jurisdictions that follow the uncertain model law for example the seat is essentially a choice of procedural law that lets arbitrary but you can and may hold hearings and the tribunal can deliberate somewhere outside the scene of the arbitration now with that point in mind i'd like to emphasize the drafting tip at the bottom of the slide here an arbitration agreement should refer specifically to the seat or the place of the arbitration being state x if instead you have language like the arbitration shall take place in x or the arbitration shall be held in x that could be deemed to suggest that the parties have only specified where the hearings will take place and that they have not specified the legal seat of the arbitration some courts and tribunals will interpret such language language as establishing the seat but others might not so it's better to use precise language to avoid that risk now finally you may ask what happens if the parties do not designate a seat in the arbitration agreement now under some institutional rules the tribunal has the authority to determine what the seat of the the arbitration is after hearing the views from the parties there is sometimes but not always a presumption in favor of the institution's own home jurisdiction that leads me to the next question you should consider drafting an effective arbitration agreement which is whether to provide for institutional or ad hoc arbitration institutional arbitration is conducted pursuant to a set of rules published by an arbitral institution there are a great number of regional and global institutions such as the arbitration and mediation court of the caribbean the bvi international arbitration center the international chamber of commerce and many others institutional rules address a number of important procedural aspects of the arbitration and they provide for the institution to act as an appointing authority for arbitrators the institution also carries out many other important functions to assist in the arbitration such as constituting a tribunal hearing challenges to arbitrators and fixing the costs of the arbitration including the arbitrator's fees and in some cases institutions may scrutinize the tribunals award before it is issued to the parties on the other hand ad hoc arbitrations are conducted by the parties and the arbitrators without the support of an arbitral institution this may work in certain transactions and for certain parties but ad hoc arbitrations come with risks risks of procedural breakdowns especially at the outset of an arbitration technical defects in the arbitral award that may impact its enforceability problems with arbitrators fees and so on you may have to go to courts at the arbitral seat if the parties cannot agree on the appointment of arbitrators or if there are challenges to arbitrators or other issues now if a dispute arises but your contract does not specify an arbitral institution that doesn't necessarily mean that you have to do an ad hoc arbitration if the parties agree they can amend their arbitration agreement or enter into a submission agreement to refer the specific dispute to institutional arbitration and there are a few drafting tips on the topic of institutional arbitration that are at the bottom of the slide here it's almost always a good idea to consider the model arbitration clauses that most institutions publish these clauses are based on accumulated expertise and they're an effective way to properly incorporate the institutional rules as we'll see closer to the end of the presentation today parties sometimes refer incorrectly to institutional rules sometimes these errors can be fixed by a tribunal or a court but sometimes they lead to uncertainty and unnecessary disputes finally by choosing a particular institution and set of institutional rules one does not necessarily also choose that home that institution's home jurisdiction as the arbitral seat or that jurisdiction's law as the governing law you can certainly do that but you can also select a particular institution and choose a seat in a different jurisdiction so for example even if your contract is governed by english law or new york law you could choose institutional arbitration administered by the bbi iac or the amcc or any other institution in the caribbean in drafting an arbitration clause parties also need to decide the scope of the arbitration in other words what range or types of disputes do the parties agree to submit to arbitration and whether there are certain types of disputes that a tribunal may not decide many arbitration clauses are broad in scope encompassing all disputes relating to or arising in connection with the contract such broad language typically encompasses issues of contractual performance questions about the validity of the contract itself and even non-contractual issues relating to the party's commercial relationship an example of an arbitration clause with such a broad scope is here on the slide a different but also common formulation is to agree to arbitrate all disputes arising from the contract or arising out of the contract this formulation is a bit narrower in scope and some courts and tribunals have considered this language to be limited to contractual disputes and not to cover non-contractual claims such as torts or breach of fiduciary duty claims which might be related to the contract in some sense but don't strictly arise out of the contract parties can also specify certain types of disputes that are excluded from arbitration for example in patent licenses one often sees arbitration agreements with carve outs for disputes concerning patent validity enforceability or infringement carve out or exclusions to the scope of the arbitration clause can make sense for certain transactions but it's important to draft them carefully so as not to create uncertainty about the precise scope of the agreement in this regard it's a good practice to combine the arbitration agreement with a form selection clause specifying where those disputes that are excluded from arbitration should be brought the next issue to consider when drafting a contract and an arbitration clause in particular is the governing law this isn't strictly a required part of the arbitration clause but i want to note that there can be different laws governing different parts of a contract different aspects of the contract and disputes relating to a contract most commonly there is a choice of law clause specifying the law or rules governing the substantive issues in dispute parties have a choice in selecting the governing law for example they can choose the law of the arbitral seat the law of the place of performance of the contract or the law of some other jurisdiction that might increase predictability for the parties because of that jurisdiction's relatively developed commercial and contract law somewhat less commonly parties may want to specify the law governing the arbitration agreement which could but does not have to be different from the substantive law governing other provisions of the contract this may be useful in some instances but could also cause some confusion in others contracts often do not specify a separate law governing the arbitration agreement so it's important to be aware of the approach in various jurisdictions regarding the implied choice of law governing the arbitration agreement whether it be the law of the seat or the substantive law of the contract or something else parties also have the autonomy to choose the number of arbitrators to resolve their dispute in the method by which the arbitrators will be appointed there are many different ways one can appoint members of a tribunal this is something we can explore in more detail during the breakout sessions but i'll share a few general points here first in practice parties typically either choose a sole arbitrator or a panel of three arbitrators in making that choice in their arbitration agreement parties often try to foresee what types of disputes are likely to arise under the contract although this can be difficult to predict in advance if foreseeable potential disputes are relatively small and uncomplicated parties might prefer a sole order trader to minimize the costs of the arbitration and to allow for a more efficient proceeding if the disputes are likely to be more significant and complex parties might prefer a three-person tribunal which often allows each party to select one of one member of the tribunal and to have a say in the appointment of the presiding arbitrator one of the benefits of institutional arbitration this in this regard is that if the parties do not specify the number of arbitrators or the method of appointing arbitrators in the arbitration agreement the institutional rules often provide for a default number or method of appointment parties might also want to specify certain qualifications that the arbitrators will be required to have this is not strictly necessary in an arbitration clause but may be useful in particular transactions such as those where expertise in a specific certain a specific subject matter or fluency in a specific language is important as we'll see later in the presentation it's important to draft these qualifications carefully so as not to unduly restrict the pool of potential arbitrators there are a number of other elements to consider in drafting an arbitration clause this may not be necessary in every transaction but it can be important that's why it's critical to consider the needs of the parties and the characteristics of the transaction at hand before copying and pasting an off-the-shelf arbitration here are some of some examples of other elements to consider the language of the arbitration can be important it can affect the choice of law and the seat the choice of the arbitrators and from a practical perspective language of the arbitration can affect a party's ability to monitor and participate in the proceedings and their choice of counsel another option is to include a multi-tiered or so-called step clause in which some other form of adr such as negotiation conciliation mediation or expert determination is required before engaging in formal binding arbitration proceedings we'll talk about this option in more detail shortly there are several other elements to consider in drafting an arbitration clause including with respect to procedural issues the confidentiality of the arbitration and the part the powers of the arbitrators to award certain relief so we've spent some time discussing the things that one should include in the arbitration agreement now let's talk about now let's talk about what not to do i'll share a few examples of common mistakes parties or the council make in drafting arbitration clauses the first and perhaps real most common mistake is to be unclear as to whether arbitration is mandatory and binding we see here an example of an arbitration clause that states that any dispute may be referred to arbitration that does not commit the parties to arbitration and the outcome may be protracted litigation about how exactly to resolve any dispute that might arise to avoid equivocation arbitration agreements should state that disputes shall or must be referred to arbitration let's return to the topic of multi-tiered step clauses that i just mentioned these are clauses that provide for one or more other forms of dispute resolution before resorting to arbitration you have to be careful in drafting step clauses to avoid the risk that the added procedure will result in a procedural loop or an impasse that might divest the tribunal of its jurisdiction on the slide here we see some examples of imprecisely drafted step clauses in the first example a preconditioned arbitration is that negotiation or friendly settlement should be impracticable but it isn't clear what that means or who gets to decide whether and when negotiation has been practical in the second example disputes which may be resolved by conciliation shall be dismissed shall be submitted first to conciliation again it is unclear how one is to determine whether a given dispute may be resolved by conciliation and it is unclear how the how long the parties must attempt conciliation before commencing arbitration the third example here requires the parties to mediate so long as one party believes settlement remediation is possible as you might expect this is a great way for a party resisting arbitration to drag its feet and prolong the dispute indefinitely so if you are providing for a multi-tier dispute resolution process you should state clearly when each stage begins and ends and whether it is optional or mandatory in this regard it can be helpful to specify a time limit for negotiation or mediation to prevent one party from holding up the process another issue we often see is that an arbitration agreement has vague or incorrect references to arbitral institutions or rules and sometimes this problem is combined with ambiguity about the orbital seat the first example on the slide the arbitration clause states that the dispute will be resolved by arbitration in paris but it also says that the seat of the arbitration shall be england reference to arbitration in paris may have been intended to indicate when where the parties want the hearings to be held but it's better to be more precise to avoid any ambiguity you also often see references to arbitral institutions that do not exist the third example refers to the single singapore arbitration party arbitration body as singapore and then also refers to a commission the parties here may have intended to refer their disputes to institutional arbitration before the singapore international arbitration center but that isn't clear from the language of this agreement as we can see from these examples it's important to refer clearly to the seat institutions and rules using an institution's model arbitration clause is a good place to start the final common mistake i'll mention here is to include too much specificity with respect to the arbitrator's qualifications or the arbitral procedure overly specific arbitration clause can cause problems enforcing the cause in the event of a dispute for example if you name a specific arbitrator in your agreement when is when a dispute ultimately arises the arbitrator may be unable or unwilling to serve for any number of reasons you could also have problems if you specify numerous arbitrator qualifications that unduly limit the pool of potential arbitrators parties are also sometimes a bit too ambitious in specifying requirements for arbitrary procedures that may be difficult or impossible to follow and practice and that risks jeopardizing the ultimate enforceability of the arbitral award so thanks for listening to this presentation and i look forward to discussing aspects of these issues in more detail during the q a and during the breakout session