[FN1]. "Boilerplate: n., adj. slang for provisions in a contract, form or legal pleading which are
apparently routine and often preprinted. The term comes from an old method of printing. Today
"boilerplate" is commonly stored in computer memory to be retrieved and copied when needed. A
layperson should beware that the party supplying the boilerplate form usually has developed
supposedly "standard" terms (some of which may not apply to every situation) to favor and/or
protect the provider." Gerald N. Hill & Kathleen Thompson Hill, The Real Life Dictionary of the Law,
Law.com Dictionary, at http:// dictionary.law.com (last visited Mar. 14, 2005).

[FN2]. For example, beyond the case law that will be discussed below, consider researching your
specific jurisdiction's approach to enforcement of the agreement to mediate. Your client's arbitration
provision may require an exception to the expedited process for certain disputes that require more
discovery, a tribunal rather than a single arbitrator or other changes because of the complexity of
the issues or the amount in controversy.

[FN3]. The layered clause is useful in other contexts, including family law, litigation settlement
agreements, in-house corporate dispute resolution process design, and beyond.

[FN4]. The distinctions drawn here are more than semantics. When we examine how people
respond to conflict, the dispute resolution continuum is divided first based upon who controls the
decisions leading to the outcome and secondly based upon who controls the process. The former
refers to whether the parties retain or relinquish control over the outcome. The latter suggests that
one side of the continuum brings about results through judicial procedure (adjudicated), the other
outside of the courthouse. Mediation falls comfortably on the party-controlled, non-judicial side of
the continuum; save for the control exercised in selecting it, arbitration inches perilously close to a
judicial process. (Witness the colloquialism "rent-a-judge" often used to refer to arbitration.) Except
for the fact that the person issuing the decision is not a sitting judge, the outcome of the dispute is
determined by that person - namely the arbitrator - and the procedures used to get there are
derived from judicial processes.

[FN5]. AMERICAN ARBITRATION ASSOCIATION, DISPUTE-WISE BUSINESS MANAGEMENT:
IMPROVING ECONOMIC AND NON-ECONOMIC OUTCOMES IN MANAGING BUSINESS CONFLICT
3 (2003), available at http:www.adr.org/dw.

[FN6]. Id.

[FN7]. Id.

[FN8]. The layered clause should not be viewed as an isolated means of dealing with disputes.
Rather, it should be but one spoke of your client's dispute resolution policies and practices.

[FN9]. Perhaps as somewhat of an aside, anecdotally we know that often even at arbitration the first
question raised by the arbitrator is whether she can help with settlement. Building on the
non-adjudicative process foundations, often introduction of another third party view can rejuvenate
negotiations.

[FN10]. See case law discussion below regarding issues the court will determine are within the
purview of arbitral authority.

[FN11]. Review case law in the governing jurisdictions - where the parties are located, where the
contract is to be performed, and based upon the governing law provision in the contract - which
should provide guidance on whether, and if so how, to modify this language.

[FN12]. Mediators often refer to finality as one of the many pluses to mediation. Once a resolution
is found and documented, unlike litigation, there is no awaiting the dropping of the other shoe that
comes with an appeal. Also, because of the direct involvement of party principles in the
party-determined process, ownership of the solution leads to the likelihood of full performance
under its terms. CHRISTOPHER W. MOORE, THE MEDIATION PROCESS: PRACTICAL
STRATEGIES FOR RESOLVING CONFLICT 142 (2nd ed., Jossey-Bass 1996) (1986).

[FN13]. Here too there is drafting flexibility. Timing of the triggering events can and should be part
of the initial contract drafting negotiations, with direct input from the parties who are most familiar
with their business, what can potentially land them in a dispute, and how long they want to devote to
this phase of the process. Your familiarity with the ADR process will greatly add to these drafting
negotiations.

[FN14]. Kathleen M. Scanlon & Harpreet K. Mann, A Guide to Multistep Dispute Resolution Clauses,
ALTERNATIVES TO THE HIGH COSTS OF LITIGATION, Sept. 2002, at 1. There are added
benefits. Involving the Party-principals affords the opportunity to bring in decision-makers other
than those directly involved in the dispute (for example a sales manager and a customer, the
former perhaps being influenced by how the outcome of the dispute will impact his commission). It
enables the Parties to bring in the person most skilled in dealing with the particular dispute,
recognizing that the personality of the effective negotiator is quite distinct from that of the advocate
in the arbitral or court forum. This approach increases the likelihood that resolution can be reached
faster and cheaper than when the battle lines are drawn by proceeding from dispute directly to
arbitration or court.

[FN15]. Settlement agreement enforcement is particularly important when dealing with transnational
commercial disputes. Consider using a mechanism by which an arbitrator converts the agreement
to an award that can then be enforced under the New York Convention (Convention on the
Recognition and Enforcement of Foreign Arbitral Awards).

[FN16]. The drafter should also consider stating where the mediation is to be held. This is
especially important in the international commercial context, a subject worthy of a wholly separate
article.

[FN17]. Often, your Mediator will remind the parties that they began their relationship with
agreement and continue to believe in it by agreeing to come to the table. Mediators always want to
find even a small thread from which the fabric of resolution can be woven.

[FN18]. 5A OHIO JUR. 3D Alternative Dispute Resolution § 165 (2004). As pointed out in section
165, courts have enforced mediation clauses even in the absence of statutory authority.

[FN19]. Curiously given the near embryonic stage of mediation internationally, mediation clause
enforcement has been the subject of academic and judicial discussions. Tanya Melnyk, The
Enforceability of Multi-Tiered Dispute Resolution Clauses: The English Law Position, 5 INT'L. ARB.
L. REV. 113, 113-118 (2002); Michael Pryles, Multi-tiered Dispute Resolution Clauses, 18 J. INT'L.
ARB. 159, 159-176 (2001); Cable & Wireless Plc v. IBM U.K. Ltd, 2 All E.R. (Comm) 1041 (Q.B.
2002). For an interesting discussion of this U.K. Commercial Court decision, see Herbert Smith,
Commercial Court Enforces ADR Clause, Consilio: The Online Law Student Journal, at
http://www.spr-consilio.com/artcommercial1.htm (Nov. 5, 2002).

[FN20]. A. T. Chadwick Co. v. PFI Constr. Corp., No. 01998, 2004 WL 2451372, at *3 (Pa. Com. Pl.
2004). While this court did not deny the enforceability of mediation clauses, there is no mention of
its endorsement of these provisions. Id.

[FN21]. Hillock v. Wyman, No. CV-01-303, 2003 WL 21212014, at *2 (Me. Super. Ct. 2003). This
court's approach does not bode well for mediation clause enforcement. "As a matter of fairness and
practicality," it surmised, "the court cannot retrospectively enforce a mediation clause after
determining, with the benefit of hindsight, that mediation would have been futile." Id.

[FN22]. DeValk Lincoln Mercury, Inc. v. Ford Motor Co., 811 F.2d 326, 328 (7th Cir. 1987).

[FN23]. Id. at 328-29.

[FN24]. Id. at 335-36 ("The mediation clause here states that it is a condition precedent to any
litigation .... Because the mediation clause demands strict compliance with its requirement ... before
the parties can litigate, plaintiffs' substantial performance arguments must fail.").

[FN25]. Bill Call Ford v. Ford Motor Co., 830 F. Supp. 1045, 1047-48 (D. Ohio 1993).

[FN26]. Id. at 1053.

[FN27]. See, e.g., CB Richard Ellis, Inc. v. Am. Envtl. Waste Mgmt., No. 98- CV-4183 (JG), 1998
U.S. Dist. LEXIS 20064, at *2 (E.D.N.Y. Dec. 4, 1998) (Defendant's motion to stay proceedings and
compel mediation under the contract granted; broad wording of the clause, without exclusions,
covered all disputes; FAA as mediation would "settle the controversy.").

[FN28]. See generally Cecala v. Moore, 982 F. Supp. 609, 612 (N.D. Ill. 1997); Mortimer v. First
Mount Vernon Indus. Loan Assn., No. AMD 03-1051, 2003 U.S. Dist. LEXIS 24698, at *5 (Md. May
19, 2003) (Under Maryland Arbitration Act, the claim for title to real property arose out of or from
the contract and was unquestionably encompassed by the mediation clause.); Lee v. YES of
Russellville, Inc., 784 So. 2d. 1022, 1026 (Ala. 2000) (Alabama Supreme Court held that FAA
controls in Alabama and mediation/arbitration provisions in valid contracts would be enforced
except for situations where such provisions "could make other provisions of a contract
inapplicable.").

[FN29]. Fisher v. GE Medical Sys., 276 F. Supp. 2d 891, 894 (M.D. Tenn. 2003).

[FN30]. Id. at 892.

[FN31]. CHRISTOPHER W. MOORE, THE MEDIATION PROCESS: PRACTICAL STRATEGIES FOR
RESOLVING CONFLICT 18, 179 (1986).

[FN32]. The drafter should consider negotiating for a designated mediator at the drafting stage and
inserting the mediator's name into the contract. For example, "The Parties agree that Robert N.
Dobbins, LL.M., shall act as mediator in any mediation arising under this Dispute Resolution
section."

[FN33]. AMERICAN ARBITRATION ASSOCIATION, supra note 5, at 9, 10.

[FN34]. Party-principal participation bolsters the reaffirmed goal. See discussion under the
Negotiation section.

[FN35]. What disputes are appropriate for mediation? View the answer broadly: "As a general rule,
the only cases that might be totally inappropriate for mediation are cases where parties need a
legal precedent established .... [C]onsider mediation as the next logical step if negotiations
themselves have failed to achieve resolution." KARL A. SLAIKEU, WHEN PUSH COMES TO SHOVE:
A PRACTICAL GUIDE TO MEDIATING DISPUTES 15 (1996).

[FN36]. Michael F. Donner, Litigation Avoidance 101: What Every Real Estate Lawyer Should Know
about Avoiding Litigation, at 4, Presentation at American Bar Association, Section of Real Property,
Probate and Trust Law, 2001 Annual Spring Symposia (Apr. 27, 2001), available at http://
www.abanet.org/rppt/cmtes/rp/b3/2001_spring_presentation.pdf.

[FN37]. As a practitioner, one must carefully consider whether to make binding arbitration the final
stop on the dispute resolution trail. Your client may be predisposed to seeking judicial remedies
rather than placing himself in the private adjudicative arena of arbitration. In those instances,
consider supplementing or replacing the arbitration clause with language setting the final dispute
resolution stop at the courthouse.

[FN38]. See, e.g., Smith v. Young Moving & Storage, 606 S.E.2d 173 (N.C. Ct. App. 2004); Mandl v.
Bailey, 858 A.2d 508 (Md. Ct. Spec. App. 2004).

[FN39]. Health Plan of Nevada Inc. v. Rainbow Medical LLC, 100 P.3d 172, 178 (Nev. 2004); see,
e.g., Conn. State Police Union v. Dep't of Public Safety, 863 A.2d 344, 347 n.7 (Conn. Super. Ct.
2004) ("A submission to arbitration is unrestricted if there is no express language restricting the
breadth of issues, reserving explicit rights or conditioning the award on court review.") (quoting
Wachter v. UDV N. Am., Inc., 816 A.2d 668, 673 n.9 (Conn. App. Ct. 2003)).

[FN40]. See Nussbaum v. Kimberly Timbers, Ltd., 856 A.2d 364, 369 (Conn. 2004) ("[I]t is the
province of the parties to set the limits of the authority of the arbitrators, and the parties will be
bound by the limits they have fixed.") (quoting Success Ctrs., Inc. v. Huntington Learning Ctrs., Inc.,
613 A.2d 1320, 1326 (Conn. 1992)). Furthermore, the parties can also specify the arbitrator's
authority in a written submission, the terms of which will modify the broad scope of the Layered
Clause by agreement of the parties.

[FN41]. Economos v. Liljedahl Bros. Inc, 862 A.2d 312, 317 (Conn. App. Ct. 2004) ("[A]lthough the
discretion conferred on the arbitrator by the contracting parties is exceedingly broad, modern
contract principles of good faith and fair dealing recognize that even contractual discretion must be
exercised for purposes reasonably within the contemplation of the contracting parties.").

[FN42]. We will discuss this further in the section on the growth of unfavorable views of arbitration.
See Stack v. Karavan Trailers Inc., 864 A.2d 551, 555 (Pa. Super. Ct. 2004).

[FN43]. Samuel Williston, A Treatise on the Law of Contracts, § 57:114 (Richard A. Lord ed., 4th
ed. 2001) ("Clearly," Prof. Williston explains, "where the submission provides for equitable relief,
arbitrators may issue an injunction, or order specific performance, as the power of an arbitrator to
order specific performance in an appropriate case has been recognized from early times.").

[FN44]. Id.

[FN45]. Id.

[FN46]. Superadio Ltd. P'ship v. Walt "Baby" Love Prods. Inc., 818 N.E.2d 589, 592 (Mass. App. Ct.
2004) (The triggering event for the court here was the arbitrator's award that assessed monetary
sanctions for failure to comply with discovery orders. Here neither the submission nor state statutes
authorized the arbitration panel to issue sanctions. The court treated the discovery sanctions as a
dispute that arose from the conduct of the arbitration itself and not a dispute that arose under the
contract.).

[FN47]. Chief Justice Warren E. Burger, Address at the Annual State of the Judiciary Report to the
American Bar Association (Feb. 1984), in 52 U.S.L.W. 2471, 2471 (1984).

[FN48]. Id.

[FN49]. Michael Hunter Schwartz, From Star to Supernova to Dark, Cold Neutron Star: The Early
Life, the Explosion and the Collapse of Arbitration, 22 W. St. U. L. Rev. 1 (1994). In this most
interesting article published 11 years ago, Prof. Schwartz reviews the history of arbitration, its
claimed benefits, and he predicts its demise resulting from the expectation of it morphing into a
process almost indistinguishable from litigation.

[FN50]. See Federal Arbitration Act, 9 U.S.C. § 10 (2001).

[FN51]. Commonw. Coatings Corp. v. Cont'l Cas. Co., 393 U.S. 145, 149 (1968) ("[The arbitrators
have] completely free rein to decide the law as well as the facts and are not subject to appellate
review.").

[FN52]. See e.g., Christine M. Reilly, Achieving Knowing and Voluntary Consent in Pre-Dispute
Mandatory Arbitration Agreements at the Contracting Stage of Employment, 90 Cal. L. Rev. 1203
(2002); Russell Evans, Engalla v. Permanente Medical Group, Inc.: Can Arbitration Clauses in
Employment Contracts Survive a "Fairness" Analysis?, 50 Hastings L.J. 635 (1999); Elizabeth G.
Thornburg, Mandatory Arbitration: Contracting with Tortfeasors: Mandatory Arbitration Clauses and
Personal Injury Claims, 67 Law & Contemp. Probs. 253 (2004).

[FN53]. Before dismissing outright the validity of this approach, as a practitioner, talk with your
colleagues who are in the litigation trenches about their current views on the practical benefits of
arbitration.

[FN54]. Carlsten v. Gruss & Son, Inc., 853 A.2d 1191 (R.I. 2004).

[FN55]. Id. at 1195 (italics added) (internal quotes omitted).

[FN56]. Di Jiang-Schuerger, Perfect Arbitration = Arbitration + Litigation?, 4 Harv. Negot. L. Rev.
231, 231 (1999).

[FN57]. Undoubtedly the creative drafter can craft more and different provisions in an effort to
maintain the quality of the process, its efficiency and effectiveness, and to assure that it truly offers
an alternative to litigation through the courts. The intent here is to provide a workable process and
stimulate the proverbial creative juices.

[FN58]. Expedited Arbitration Rules are adopted by the World Intellectual Property Organization,
available at http:// arbiter.wipo.int/arbitration/contract-clauses/index.html. Similarly, several U.S.
industries (such as construction and wireless) have included fast track procedures in industry-wide
arbitration. See American Arbitration Association, Rules and Procedures, available at http://www.adr.
org/RulesProcedures.

[FN59]. For example, the importance, number, and complexity of the issues and the amount in
controversy provide suitable topics to consider when drafting a carve-out provision.

[FN60]. Kathy L. Cerminara, Contextualizing ADR in Managed Care: A Proposal Aimed at Easing
Tensions and Resolving Conflict, 33 Loy. U. Chi. L.J. 547, 560-62 (2002).

[FN61]. Note, however, that the parties may be able to resolve many issues in mediation but not the
entire dispute. Using this hybrid process brings the best of both worlds: the unresolved issues can
be submitted to arbitration, which in turn will be more streamlined because of the
mediation-shortened controversy. Kevin M. Lemley, I'll Make Him an Offer He Can't Refuse: A
Proposed Model for Alternative Dispute Resolution in Intellectual Property Disputes, 37 Akron L.
Rev. 287, 307-08 (2004).

[FN62]. Id.

[FN63]. Eric D. Green, International Commercial Dispute Resolution: Courts, Arbitration, and
Mediation - Introduction, 15 B.U. Int'l L.J. 175, 175 (1997).

[FN64]. Alternative Dispute Resolution Act of 1988, 28 U.S.C. §§ 651-58 (2005).

[FN65]. Lemley, supra note 60, at 309.
END OF DOCUMENT

(C) 2006 Thomson/West. No Claim to Orig. U.S. Govt. Works.

Footnotes to
The Layered Mediation Clause