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You are the attorney for Wee Willie’s Waffelhaus, Inc. (WWW ) who is negotiating a licensing deal with International House of Crepes (IHOC). The chief executive officer of WWW has asked for recommendations about appropriate arbitration language to be included in the WWW / IHOC agreement that is being negotiated.
Your assignment is to prepare a written memorandum to your client that (a) responds to your client’s questions, (b) makes recommendations about what to include in an arbitration agreement to address the client’s concerns, and (c) sets forth possible arbitration clause language that fits your recommendations. You are encouraged to review the lecture slides and posted articles related to clause drafting.
Privileged and Confidential Memorandum
FROM: J. Smith, Vice President and General Counsel
TO: B. Lawrence, Esq., Lawrence Peabody & Bright APLC
RE: Concerns about negotiations with International House of Crepes (IHOC)
Here are some thoughts for you as you represent us in our final meeting with International House of Crepes (IHOC) regarding our planned licensing agreement. As you know, we will be agreeing to give IHOC a license to use Wee Willie’s proprietary batter and boysenberry syrup in their outlets throughout the Eastern U.S. As I explained on the phone, we have everything nailed down except for the terms of our dispute resolution provision. We are retaining you because of your expertise in arbitration and “ADR.” It occurred to me that there were one or two things I needed to get clarified before the meeting, and I’d appreciate your considering the following before you negotiate the arbitration / dispute resolution provision for us:
1. First of all, I am nervous that if we get into a big dispute with IHOC, there might be issues relating to our secret proprietary formulas. We want to try to prevent IHOC from seeing any of our trade secrets during the arbitration (like the very similar batter we are furnishing IHOC’s competitor, Pancake Kastle). I also want to make sure that anything we disclose in any arbitration does not get into the hands of third parties. (We are in a very competitive industry, as you know.) What kind of confidentiality protection is available in arbitration? Can I count on total privacy there – meaning no public record? No media? No public access?
2. We have been in mediation before, and I know it is a very confidential process. Does arbitration afford the same level of confidentiality protection as mediation? Please explain. In particular, we would like to know if the participants to an arbitration owe each other a duty – as a matter of law – to maintain the confidentiality of what is said and done in any arbitration proceeding?
3. We have generally had good results in mediation, albeit after a lawsuit has been filed and a certain level of litigation and sometimes discovery has occurred. Since the filing of an arbitration triggers the appointment of an arbitrator (or panel of arbitrators) who charge for their time, should we include a provision that requires mediation before either side can commence an arbitration proceeding?
4. If we include an arbitration clause in our agreement, are we foreclosed from filing a lawsuit in the court, especially if we need emergency or interim relief like a temporary restraining order or preliminary injunction? And are provisional remedies such as prejudgment writs of attachment and the appointment of a receiver available in arbitration?
5. One of my colleagues told me that there is no discovery in arbitration beyond that which the arbitrator may allow as between the parties unless the contract provides otherwise. Should we include an express provision for some level of discovery between the parties. And what about discovery from third-party witnesses? Is that allowed in arbitration?
6. One of my colleagues told me that one of the benefits of arbitration is that the parties get to pick their decision maker. Exactly how does that process work, and is there any way that we can require that the arbitrator be an attorney or retired judge with a certain amount of experience? Please advise how this works and what our options are in this regard.
7. Finally, what if the arbitrator gets is wrong. How do appeals work in arbitration? Is it any different from that which is available when a judgment is rendered by a court?

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