Arbitration Clause - Comprehensive

Disclaimer:  This sample clause is provided with the understanding that neither the author nor CoMA is rendering any legal or other professional service.  No representation or warranty is made concerning the application of the legal or other principles in this clause to any specific fact situation, nor is any prediction made concerning how any particular judge, arbitrator or other official will interpret or apply this clause. The proper use or application of this clause is a matter for the considered judgment of the individual legal practitioner, and the author and CoMA disclaim all liability therefore.  Attorneys dealing with specific legal matters should also fully research current primary authorities.

Samuel Cheris speaks about the use of arbitration clauses and considerations in his interview at http://coma.com/samuel-cheris-interview.  He provided this sample as a followup to that interview.

1.    Dispute Resolution. 
In the event of any dispute, claim, question or disagreement (the “Controversy”) arising from or relating to this Agreement or the breach thereof, the parties hereto shall use reasonable efforts to settle the Controversy.  To this effect, upon notice from one party to the other of a Controversy, they shall consult and negotiate with each other in good faith and, recognizing their mutual interests, attempt to reach a just and equitable solution satisfactory to both parties. 
1.1.    Escalation Procedure
The parties shall escalate the Controversy within their respective companies as follows:
Issues shall be escalated by first contacting the individual identified in the “First Contact” row.  If after the defined response time, the issue(s) remain(s) unresolved, the individual in the “Second” Contact” row will be contacted, and so forth.  Each contact shall have the amount of time indicated in the “Response Time” column for bringing resolution to the issue, prior to the issue being escalated to the next contact level.

1.2.    Arbitration
1.2.1.    Rules of Arbitration -- If the parties do not reach such solution within a period of sixty (60) days of the giving of notice of the existence of a Controversy by either party, then, upon notice by either party to the other, the Controversy shall be finally settled by arbitration administered by CoMA in accordance with the provisions of the Commercial Arbitration Rules of the American Arbitration Association, including the Emergency Interim Relief Procedures, which may be implemented even during the sixty (60) day negotiation period noted above.
1.2.2.    Applicable Procedures -- All Controversies for less than $75,000 shall be made subject to Expedited Procedures and all Controversies in excess of $1,000,000 shall be subject to the Supplementary Procedures for Large Complex Disputes of American Arbitration Association.
1.2.3.    Selection of Arbitrators -- If the Controversy is for $1,000,000 or less, the case shall be heard by a sole arbitrator, such arbitrator shall be an attorney with experience in _________________.  In all other instances, the case shall be heard by three arbitrators, one arbitrator shall have experience with ______________________, a second shall be primarily a transactional attorney with experience in _________________ and the third shall be an attorney with experience in litigation.
1.2.4.    Governing Law for Arbitration -- This Agreement shall be governed by and interpreted in accordance with the internal laws of the State of Colorado, excluding rules of conflict of laws.  All arbitration proceedings shall be conducted in Denver, Colorado.  The parties acknowledge that this Agreement evidences a transaction in interstate commerce.  The Federal Arbitration Act shall govern the interpretation, enforcement and proceedings pursuant to the arbitration clause in this agreement.

1.2.5.    Sharing of Documentation -- Consistent with the expedited nature of arbitration, each party will, upon written request of the other party, promptly provide the other with copies of documents relevant to the issues raised by any claim or counterclaim.  Any Controversy regarding discovery, or the relevance or scope thereof, shall be determined by the sole arbitrator or the chair of the arbitration panel, which determination shall be conclusive.  All discovery shall be completed within 60 days following the preliminary hearing.
1.2.6.    Depositions -- At the request of a party in a Controversy in excess of $250,000, the sole arbitrator or the chair of the arbitration panel shall have the discretion to order examination by deposition of witnesses to the extent s/he deems such additional discovery relevant and appropriate.  Depositions shall be limited to a maximum of three per party and shall be held within 30 days of making the request.  Additional depositions may be scheduled only with the permission of the sole arbitrator or the chair of the arbitration panel, and for good cause shown.  Each deposition shall be limited to four (4) hours duration (direct examination).  All objections are reserved for the arbitration hearing except for objections based on privilege and proprietary or confidential information.
1.2.7.    Authority of Arbitrators -- The arbitrators will have no authority to award punitive, special, consequential or incidental damages.  The award shall be limited to actual direct damages suffered by the prevailing party.  Any monetary award in an arbitration initiated under this clause shall include pre-award interest at the rate of __% per annum from the time of the act or acts giving rise to the award.  The arbitrators shall award to the prevailing party, if any, as determined by the arbitrator(s), all of its costs and fees.  “Costs and fees” mean all reasonable pre-award expenses of the arbitration, including arbitrators’ fees, administrative fees, travel expenses, out-of-pocket expenses such as copying and telephone, court costs, witness fees and attorneys’ fees.
1.2.8.    Judgment -- The parties agree that a judgment of any court having jurisdiction may be entered on the award of the arbitrator.
1.2.9.    Confidentiality  -- Except as may be required by law, neither a party nor an arbitrator may disclose the existence, content or results of any arbitration hereunder without the prior written consent of both parties.