What You Need to Know About Submission Agreements
Parties often assume that, if they have not elected for arbitration or mediation in their business contracts before a dispute arises, they inevitably are left with litigation as their only option. This is not the case. Rather, parties can submit their dispute to ADR at any time after the point of dispute—they may do so when the dispute arises, while the parties are engaged in negotiations toward resolution, or even if the dispute is already being actively litigated in court.
In the submission agreement, the parties agree to submit the specific dispute at issue to ADR. The process is rather straightforward—parties simply need to agree to an alternative process for resolving their dispute, whether it is arbitration, mediation, or a combination of both. Some ADR providers help the parties with this process by providing a simple form that may be filled out by the parties and submitted as a case filing. These forms solicit the basic necessary information to commence a matter, including the names of the parties, a brief statement of the dispute, and the requested location for the mediation or arbitration. In the form, parties can also choose the specific rules or procedures that should govern the resolution of the dispute. They can also specify the name of the neutral (mediator or arbitrator) that they wish to help resolve the dispute or the process by which the neutral should be selected. The form also provides the required language to submit parties to binding arbitration, if that is the choice of the parties.
Since ADR is a flexible and party-driven process, the simple form is not the only option available to the parties. They may also choose to draft a submission agreement that is more detailed. For parties wishing to draft a submission agreement, they have the benefit of using model clauses that provide standard language and cover various considerations in doing so. Most institutions provide sample language that parties can use in these circumstances. For example, parties can start with the following sample language, provided by CPR Dispute Resolution:
We, the undersigned parties, hereby agree to submit to arbitration in accordance with the International Institute for Conflict Prevention and Resolution (“CPR”) Rules for Administered Arbitration (the “Rules”) the following dispute:
We further agree that we shall faithfully observe this agreement and the Rules and that we shall abide by and perform any award rendered by the arbitrator(s). The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., and judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof. The place of arbitration shall be (city, state).
In this instance, the parties would incorporate the clause into a signed agreement, which can be filed with the ADR provider institution. Additionally, parties may choose to proceed with arbitration using specialized rules that might be more applicable to the dispute, such as proceeding under Fast-Track Arbitration Rules, International Arbitration Rules, or subject matter rules like Employment Arbitration Rules. Parties likewise may choose a different process altogether, such as Mediation, a Concurrent Arbitration-Mediation process, or Early Neutral Evaluation. Model clauses are available for all these scenarios from CPR; many other institutions may provide similar options as well. The most common routes for submission agreements include the following processes:
Mediation provides a non-binding process where parties resolve the dispute on terms that the parties agree upon themselves. There is only a resolution if all parties agree to one. The process can go very quickly, as parties can narrow their issues or settle the dispute in just one session.
Fast Track Arbitration asks an arbitrator or arbitrators to resolve the matter for the parties after hearing each party’s positions. Fast Track Arbitration is intended for parties that desire an accelerated, streamlined arbitration with truncated deadlines.
Concurrent Mediation-Arbitration provides parties the option to proceed with mediation and arbitration at the same time, maximizing the opportunity for a settlement informed by both of those proceedings.
Commercial Arbitration is intended for parties that desire a full-length arbitration proceeding, while still completing the process faster than under a court proceeding.
As with any ADR clause, the submission agreement can be further customized to include all the elements that the parties deem important. Because the dispute has already arisen, parties have the benefit of understanding the issues and are in a better position to tailor their process to suit their needs and interests. They should consider the number of arbitrators they wish to have deciding the dispute—noting that with three arbitrators, costs may increase by more than three times those with a single arbitrator. Parties may also wish to incorporate procedural elements into the submission agreement, including the scope of discovery for the proceeding, a procedure for the testimony of witnesses, or whether motions can be filed. Those looking for guidance in this area may consider looking to the Protocol on Disclosure of Documents & Presentation of Witnesses in Commercial Arbitration, offered by CPR, which can be used in disputes administered by any provider. Finally, parties should consider what kind of decision they want from the arbitrator—from a simple, unreasoned award, to a full-length reasoned award, to findings of fact and conclusions of law. Some parties may wish to see that the tribunal has carefully considered the evidence, arguments, and law and issued an objectively “correct” award, and more detailed awards also enable the parties to better understand the award. On the other hand, more detailed awards often take longer and cost the parties more money.
Parties wishing to participate in the ADR process have several options available to them, even when they do not have an ADR provision in their contract. Following the straightforward steps described herein—via a form submission or drafting a submission agreement using model clauses—parties may file their disputes with the ADR provider of their choice, even after a dispute arises. Armed with this knowledge, counsel can help their clients find faster routes to solve their disputes.