The conflict management rules (CMR) of the Deutsche Institution für Schiedsgerichtsbarkeit e.V. (DIS), the German Institution of Arbitration, present a unique option for litigants interested in out-of-court resolutions to their disputes.
In 2000, when the CMR and other innovative rules were enacted, the DIS became the first and only institution to offer conflict management services. These include advising conflicted parties of the dispute resolution options available to them, based on the specific circumstances of their actual controversy.
The service is particularly useful given the multiplicity of alternative dispute resolution (ADR) techniques now available. Not only it is difficult to know all the ADR options available and to understand their differences in detail, it is also difficult to determine during the contract drafting stage which technique will best suit potential future conflicts.
DIS suggests that parties negotiating a contract should agree to a conflict management clause early in the contract negotiations. Should a conflict arise later, this clause would then enable the parties to agree on the fastest, cheapest and most appropriate procedure available. It would also suspend the statute of limitation (to the extent allowed by law) and commit the parties to not commencing court actions, arbitrations or other forms of dispute resolution. Most importantly the clause grants the parties a short window of opportunity, during which an experienced third party can evaluate the conflict in order to suggest the most efficient way to solve it.
The procedure costs just €3,000 (plus expenses) and can take only few days. If a conflict management clause is included in the parties’ agreement, or if no such clause exists and all the parties grant consent within two weeks (after which, rule 3.3 assumes one or more party has dissented), the DIS will appoint “without undue delay” an “independent and impartial conflict manager”, based on the “joint wishes of the parties”. The conflict manager has one week to contact the parties and arrange a meeting to draft the conflict management plan. Any party can terminate the procedure if no meeting has occurred and no result has been achieved within one month of the appointment of the conflict manager (rule 8.1(2)). The conflict manager can also terminate the procedure under these circumstances three months after he or she was appointed, according to rule 8.1(3).
The true value of the conflict management procedure is—according to the introduction to the DIS CMR—in its being a “conflict clarification procedure”. The procedure is intended to allow for an analysis of the unique characteristics of the conflict in order to identify elements that otherwise the litigants may not discover until after they have spent considerable time, money and resources on an inappropriate dispute resolution procedure.
Pre-emptive conflict evaluation stages like this are becoming increasingly popular elements of dispute resolution clauses in contracts. Anticipating and allowing for a conflict evaluation stage before the start of formal procedure is a smart move as it saves resources and allows the parties to determine in advance how the resolution of the conflict that has arisen could be best approached, so the most efficient procedure can be selected from the outset. It is also beneficial for the actual resolution of the dispute. As mediation teaches, one of the key elements in reaching an amicable resolution is finding agreement at least on the “ground rules”: the mechanics of the resolution procedure. This agreement ensures the focus of the process is on the specific points of dissention, rather than on any personal issues. Discussing the options for dispute resolution with an experienced third party who can analyse the specifics of a conflict is the best way for the involved parties to identify and agree to mutually acceptable ground rules.