07 November 2002

This information is provided courtesy of Law-Now, CMS Cameron McKenna's free on-line information service.

www.law-now.com

Hot tip! Your ADR clause may be binding

Provided the clause is sufficiently certain as to the
procedure to be followed, there is a positive obligation
to attempt ADR before pursuing court proceedings.

Mr Justice Colman ruled last month in the case of
Cable & Wireless plc v IBM United Kingdom Limited [2002]
All ER (D) 277 (Oct) that litigation that had been
commenced should be adjourned to allow ADR to take place.
He likened an agreement to use ADR to an agreement to
arbitrate (which is enforceable), rather that an agreement to
agree (which is unenforceable). Contrary to previous rulings
an agreement to take a dispute to ADR may be binding, even
if the clause provides that it does not prevent a party
from issuing proceedings. He went so far as to rule that
such a clause could be enforced by an injunction to
prevent proceedings being issued.

Our tips, if you want your ADR clause to bite, are

- Draft a clause making it clear that it is the parties'
intention to attempt ADR if relations break down

- Set out the mechanics of the process to be followed
in detail

- Do not simply state that the parties "should attempt in
good faith to resolve the dispute or claim"

A more detailed article will be published shortly. If you
require any further information please contact Tim Hardy
at tim.hardy@cmck.com or on +44 207 367 2533 or Amanda Wadey
at amanda.wadey@cmck.com or on +44 207 367 2308.