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Hybrid and multi-tiered clauses

Some clauses provide for more than one method of dispute resolution and some require ADR before arbitration. Read on to learn more.
Hybrid clauses A hybrid clause provides for more than one method of dispute resolution, for example, ADR in the form of mediation followed by arbitration. A hybrid clause should clearly identify and specify: • the applicable dispute resolution mechanisms that have been chosen by the parties • the disputes that fall within each of the dispute resolution mechanisms chosen • whether each dispute resolution mechanism is intended to be optional or compulsory, and • whether the dispute resolution mechanisms are to operate concurrently or sequentially. If sequentially, the clause must state at which point the second mechanism becomes effective and stipulate how the costs of the first dispute resolution procedure are to be apportioned.

Multi-tiered clause A multi-tiered clause requires parties to engage in some form of ADR process before embarking on arbitration (or litigation in a national or other type of court). A multi-tiered clause should: • clearly identify the form of ADR • provide a clear trigger point (or points) for each ADR process to start and finish • clearly stipulate whether each dispute resolution mechanism is mandatory or optional, and • provide for arbitration or court proceedings if the ADR process fails.

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International Arbitration: Frameworks and Drafting an Arbitration Agreement

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