It’s not that far-fetched. Companies who sign a contract can agree in advance to resolve their disputes through arbitration.  The law that governs that arbitration, and even the place of arbitration, can all be determined in a “dispute resolution clause”. These kinds of clauses are often overlooked while the parties focus on the business points – such as price, delivery, and deadlines. However, a dispute resolution clause will suddenly be front-and-centre when the parties start squabbling, and one of them wants to get a remedy in Canada. For example, in one recent Alberta case (PetroKazakhstan Inc. v. Lukoil Overseas Kumkol B.V.), arbitration was triggered by one of the parties, and the Alberta Court decided that the breach of contract questions fell within the scope of the arbitration under the law of Kazakhstan.

What about intellectual property licensing agreements?  The same idea holds true. Canadian courts will uphold arbitration clauses. When negotiating your license, spend some time considering the dispute resolution clauses and the potential advantages of arbitration: for example, confidentiality, neutrality, and a resolution process that can be – compared to litigation – relatively quick and inexpensive.  In Bad Ass Coffee Co. of Hawaii Inc. v. Bad Ass Enterprises Inc., a Canadian licensee was held to a clause that compelled arbitration in Utah. The Canadian Court refused to grant a remedy and the licensee was bound by the decision of the US arbitrator.

Related Event: November 4, 2010 – The Licensing Executives Society – Meeting of the Calgary Chapter on the topic of “Arbitration and ADR Clauses in International License Agreements” Presented by Stephen Burns, Bennett Jones and Jim McCartney, McCartney ADR; panel moderated by Richard Stobbe: Link to Register

Calgary – 09:00 MT