Drafting an effective ADR provision in international commercial contracts

Disputes that arise in international commercial dealings may be expensive and time consuming to resolve. An alternative to litigation has developed over the years to include a number of dispute resolution mechanisms outside of the traditional state court system. These mechanisms are collectively known as Alternative Dispute Resolution (ADR) mechanisms. In order to utilise these mechanisms, parties to a commercial contract must voluntarily agree to participate in the various methods of ADR available. In order to make this intention clear, an effective ADR clause needs to be incorporated into the commercial contract. This paper looks at the contents and procedure of drafting an effective clause and concludes that the effectiveness of a clause will depend on the nature of the commercial contract and the adequacy of the ADR method in that particular context.