In too many transactions, the dispute resolution clause is treated as mere boilerplate. In fact, dispute resolution clauses present an opportunity for lawyers to add significant value to their clients’ transactions. Giving thought to issues such as the types of disputes likely to occur, where those disputes will arise, which party is most likely to be claimant and whether the disputes are likely to implicate third parties will assist the drafter in determining the arbitral scheme that best fits the client’s interests and expectations, provided the drafter understands the different options available.

When drafting an arbitration clause, the obvious threshold question is whether the arbitration should be ad hoc or administered by an arbitral institution. That initial decision will determine, in large part, the arbitration procedure to be followed in any future dispute. But the prudent drafter, when making this initial determination, will also consider issues such as joinder and consolidation, arbitrator selection in multiparty disputes, the availability of interim relief and possible appeal. An examination of these issues can ultimately drive the answer to both the threshold question and the secondary one: if institutional, which institution?

Originally published in Corporate Counsel on July 15, 2015.