“A good number of us are aware of the need to insert ADR Clauses in Contractual Agreements. That is very commendable.
The ADR Clause does not need to be COMPLEX. Following the principle of “Less Is More”, it can be as simple as:
“The Parties have agreed that any dispute raising from this Contract, they will attempt to settle it by Negotiation, Mediation, Conciliation or Arbitration, before litigation”
Kindly note the ascending order please:
- Negotiation: Just the two parties
- Mediation: A third party neutral who assists the disputing parties to arrive at a Negotiated Settlement
- Conciliation: A third party neutral who can suggest settlement terms to the parties and seek their consent
- Arbitration: A private adjudicatory process that by itself is a “contract” within the main contract with a binding outcome in the form of an AWARD
BEFORE Litigation!!!
Whilst the ADR Clause helps to bring about amicable settlement, it is pertinent to note that the ADR Clause by itself is nebulous without the insertion of a SUB-CLAUSE, specifying when each of the ADR Mechanisms MUST be ACTIVATED/INITIATED!
Example:
Negotiation, two (2) weeks; Mediation, one (1) month etc
What is the advantage of the SUB-CLAUSE?????
It prevents the Main ADR Clause from hanging in perpetuity!!!
You can have an ADR Clause in an agreement and for one full year, the process may not be activated. And if one of the parties decides to go to Court, the other will keep referring to the fact that there is an ADR Clause in the Agreement
With the SUB-CLAUSE, the MOMENT the “Activation” period is exceeded, either party can go to court!!!
Always remember please to insert the Quintessential Sub Clause in agreements!!!
It will speed up the resolution process!!!”
Amb. Segun Ogunyannwo
President, Mediation Training Institute (MTI)