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Disadvantages Of Arbitration Clauses

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4.1 MULTI STEP DISPUTE RESOLUTION CLAUSE Parties may include alternate dispute resolution as a pre-condition to arbitration in a separate clause or as a part of the arbitration clause. The aim of including multistep dispute resolution is to allow party representatives to understand strengths of the opponent’s case and weaknesses of their own case to reach a compromise; however, a clear reference to arbitration must be made in case of failure of this approach . Many arbitral institutes now provide optional conciliation rules that may be incorporated by parties in their arbitration clause or as a separate clause . Parties must include time frames with flexibility of extension to prevent undue delay in cases where there is lack of genuine willingness to settle.
To avoid unnecessary litigation, the rights and obligations of parties must be defined with utmost certainty in the clause. In Sulamerica CIA Nacional de Seguros S.A. v. Enesa Engenharia S.A. , disputes had their origin in two insurance policies containing a London Arbitration clause, an exclusive jurisdiction clause and a mediation clause, which on notice for commencement of arbitration was argued to be a condition precedent to arbitration. It was held that mediation clause failed to impose a binding obligation on parties because the dispute resolution clauses did not define with certainty what the rights and obligations of the parties were.
4.2 CONFIDENTIALITY
Confidentiality is not an implied obligation
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