Saturday, December 24, 2016

Drafting Contract Provisions on Resolving Disputes

A partner in a major law firm tells me that for the next five years, we can expect much litigation and controversy over issues like mediation and arbitration and locations for such proceedings. In a recent article, Professor John M. Newman identifies the issues that these provisions should consider. The article remains neutral on the pros and cons. Here is an introductory passage:

This is a brief guide to drafting dispute-resolution provisions. Such provisions have gained national attention in recent years. Legal scholars had, as early as 2005, been predicting that contractual dispute-resolution provisions would bring about the near-total end of class-action litigation. But it was a series of U.S. Supreme Court decisions that thrust such provisions into the national spotlight. Beginning with AT&T Mobility v. Concepcion LLC in 2011, and culminating with Italian Colors v. American Express in 2013, the Court lent much greater strength to mandatory-arbitration provisions.

Today, such provisions are likely enforceable even where state law would otherwise render them invalid, due to the preemptive force of the Federal Arbitration Act (“FAA”). This is true even where mandatory-arbitration provisions are coupled with waivers of classwide dispute resolution. This also holds true even where the practical effect of such waivers is to prevent plaintiffs from effectively vindicating their legal rights under both state laws and federal laws. . . . [S]uch provisions ought to be wielded with care and precision.

You can access the article here.


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