How to insert a Mediation Clause

Mediation Clauses

• A binding mediation agreement must be in writing.

• When parties opt against ad-hoc arbitration, it is essential to choose an arbitration institution to oversee the conduct of arbitration proceedings. This ensures procedural functionality in the arbitral proceedings, including the naming of arbitrators and continuance of administrative assistance.

• In case the parties fail to specify the distinction between ‘venue’ and ‘seat’ of the arbitration in the arbitration agreement, it will substantially affect the time and costs associated with the dispute settlement process

• Steer Clear of vague language and specify the “seat” mainly when the intention is to have a seat outside India and where Indian law is designated to be governing law of the underlying contract.

• It is, of course, advisable to include a ‘governing law’ clause in every contract. Though non-Indian parties may choose to opt for another legal system due to reasons for familiarity, the substance of Indian contract law is, however, to a large extent, within the normal aspirations of the majority of non-Indian parties and can typically be accorded to as a part of a larger settlement.

• Clauses that mandate the parties to take specific steps before the start of arbitration proceedings (such conducting meetings to solve the dispute through other means before referring it to arbitration) are often referred to as “escalation clauses,”

• These clauses should be treated with caution, as they can cause substantial delays while (as is often the case) failing to achieve the objective of effective negotiations.

• If you consider such a clause desirable, or if a counterparty insists, then be mindful that such a clause can prevent the commencement of arbitration until periods set out in the clause have expired – and with that in mind make sure that the relevant timeframe is short and transparent.

• In general, it is a rule of thumb to avoid specifying, in an arbitration clause, qualifications that the arbitrators must fulfil (in particular, a condition that only the retired judges of the Supreme Court of India or the various High Courts of India can be nominated to the tribunal).• This is because such limitations minimize the pool of arbitrators available, sometimes causing significant damage to your interest.

International Agreements.

We propose that non-Indian parties should adopt the following general approach:

o Consider, first of all, whether Indian law is needed.

o If this is not necessary, then if you can do so as by using your bargaining power, choose a non-Indian law such has UNIDROIT Principles or CISG, as they are conducive to facilitation of international trade.

o If you are required to opt for Indian law (whether under a legal requirement or as a matter of commercial bargaining power) have a trained professional review the contract.

o This is done to ensure that due consideration is given to those areas in which the Indian contract law varies from the contract law of other systems (s)

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