The United Nations Commission on International Trade Law (UNCITRAL) has recently released new model clauses designed to dramatically speed up the resolution of disputes specifically for tech businesses.
Tech companies and startups will find these clauses particularly valuable, as they offer specialized tools for resolving contractual disputes as quickly as possible, helping them maintain their momentum and protect innovation in fast-moving markets. For technology businesses facing time-sensitive disputes or complex technical disagreements, these new clauses provide a framework to resolve issues in as little as 45 days while maintaining confidentiality and leveraging technical expertise.
The UNCITRAL Working Group II was tasked in 2022 with finding ways to further accellerate the resolution of technology-related disputes. Following years of work and consultations from hundreds of international dispute resolution practitioners and institutional delegations from around the world, the Working Group finalized a set of Model Clauses on Specialized Express Dispute Resolution (SPEDR), complete with their Explanatory Notes.
These Model Clauses aim to promote flexibility, efficiency, and expertise in resolving disputes that are time-sensitive or involve technical complexity, while maintaining confidentiality.
Below are some of the key points of interest for our clients in the tech industry, highlighting how each of the new SPEDR Clauses can be incorporated into their standard contracts:
- SPEDR Model Clause on Highly Expedited Arbitration
Allows for significantly faster resolution of disputes through a highly expedited arbitration process, ideal for time-sensitive commercial relationships.
Key Features:
- Shortened timelines for various steps (e.g., selection of arbitrators within 7 days).
- Modified deadlines for rendering awards (within 45 days, with a possible extension of up to 90 days).
- Flexibility to revert to the Expedited Arbitration Rules (EARs) or even the UNCITRAL Arbitration Rules (UARs) if complexity arises.
- The clause warns against curtailing basic procedural rights despite shorter timelines.
Parties can opt to include this SPEDR clause in their contract to settle any and all disputes arising from that contract pursuant to UNCITRAL’s Expedited Arbitration Rules (EARs). As users are free to modify the EARs to address their particular contractual needs, what the SPEDR Model Clause proposes are potential modifications that work for parties that need disputes to be finally resolved as quickly as possible.
Accelerated arbitration procedures can be especially useful for businesses in the technology, construction and financial industries. In these fast-paced industries, delays in resolving disputes can lead to significant financial losses, project delays, and even business failure. Quick resolution helps increase predictability, maintain momentum, and minimize risks.
Moreover, having an accelerated arbitration mechanism could also prove essential for intellectual property infringements. Rapid resolution is crucial because delays can allow further unauthorized use, dilute the value of the IP, and hinder the owner’s ability to enforce their rights effectively. Quick decisions help protect innovations and maintain competitive advantage.
However, beware that parties may struggle to predict the complexity of potential disputes when forming a contract, so retaining flexibility in timelines and arbitration rules can be beneficial. Some apparently straightforward contractual disputes may give rise to complex legal or technical issues that need extensive evidence or longer resolution times.
Consulting with dispute resolution practitioners can help parties better anticipate challenges and identify potential complexities in their disputes. We can offer insight based on past cases, identify areas of risk, and recommend appropriate arbitration frameworks, including timelines and rules.
- SPEDR Model Clause on Adjudication
Offers a rapid interim determination on specific disputes through an adjudication process, especially useful for long-term or ongoing contracts, like in construction or technology sectors.
Key Features:
- Adjudicators can issue quick determinations, which are contractually binding but may be subject to arbitration if contested.
- Arbitration for compliance issues can be fast-tracked under the Expedited Arbitration Rules (see supra).
- The adjudicator must issue a decision within 30 days, extendable to 60 days in exceptional circumstances.
- The clause also provides an option for parties to pause any other ongoing arbitrations until an adjudicator’s determination is reached, avoiding parallel dispute processes.
This fast-track approach can provide legal certainty and maintain smooth operations while still allowing parties to pursue formal arbitration if necessary. This mechanism allows for decisions to be enforced immediately, while the right to seek final arbitration remains open. Meanwhile, businesses with ongoing contracts can resolve disputes mid-contract without damaging relationships.
Including a SPEDR Adjudication clause in contracts can be particularly useful for projects that rely on fast-moving innovation and continuous service and requiring rapid, interim dispute settlement.
Examples of such projects include:
- Start-ups: Adjudication offers a faster and more cost-effective dispute resolution method compared to lengthy litigation or arbitration. Quick interim resolutions to disputes over milestones or deliverables can keep projects on track without derailing operations. Moreover, as adjudication allows for fast decisions in disputes, such as payment or performance issues, ensuring liquidity isn’t jeopardized during the legal process.
- Technology Contracts: Complex, long-term software development or IT infrastructure projects often need quick determinations to resolve disputes without halting progress.
- Fintech: Quick resolution of compliance or security-related disputes ensures uninterrupted financial services and regulatory adherence.
- SaaS (Software as a Service) Providers: Disputes over service levels, performance, or delivery timelines can be quickly resolved, ensuring continuity in service.
- Construction Projects: Ongoing, large-scale projects may face disputes over payment, progress, or technical issues. Adjudication provides quick decisions to avoid delays and financial losses.
- Supply Chain Agreements: Adjudication helps resolve issues swiftly, ensuring the continuity of essential services or products.
- Hardware Manufacturers: When disputes arise over component quality, delivery delays, or IP issues, adjudication helps avoid project interruptions.
- Telecommunications Companies: In large infrastructure projects, fast decisions on technical or financial disputes prevent long delays in network deployment.
There are several types of businesses in various industries that could benefit from including a SPEDR Model Adjudication Clause. Specialized dispute resolution lawyers can help users identify whether their business may benefit from an adjudication clause by analyzing operations, contract structures, and potential disputes. We can ensure that the clause is most beneficial based on industry-specific risks and challenges.
- SPEDR Model Clause on Technical Advisors
Empowers the arbitral tribunal to appoint technical advisors to assist with complex technical matters, ensuring informed decision-making.
Key Features:
- Technical advisors provide specialized knowledge but are distinct from tribunal-appointed experts. Their role is primarily to explain complex technical issues to the tribunal, not to offer formal opinions.
- The tribunal must consult parties on the specific technical expertise needed and the scope of the advisor’s assistance.
- The tribunal must ensure transparency, allowing parties to comment on the technical advisor’s explanations to safeguard procedural fairness.
- Parties are given a reasonable opportunity to comment on the explanations provided by the technical advisor, ensuring transparency and fairness.
Including the SPEDR Model Clause on Technical Advisors in contracts offers numerous benefits for users, especially when potential disputes most likely involve complex technical issues – such as the tech industry – and thus specialized knowledge is critical.
Technical advisors assist the arbitral tribunal in comprehending intricate technical aspects of the dispute that may be outside the tribunal’s expertise – leading to a more informed, accurate and fair decision-making process.
Furthermore, technical advisors can help clarify complex issues quickly, reducing the time spent on explanations during hearings. By grasping technical matters efficiently, the tribunal can focus on the core issues, potentially shortening the duration of the arbitration.
Also, technical advisor can reduce the need for each party to hire their own experts, potentially lowering costs and minimizing the risk of bias. Technical advisors differ from experts (who are usually instructed by one of the parties) and provide formal opinions – they assist without introducing new evidence or advocating for a party or the other’s position.
The benefits of appointing technical advisors vary based on the nature and industry of a business. Specialized dispute resolution lawyers can help identify how technical advisors could benefit (or complicate) a case, based on the unique challenges of each project. We can assess whether a technical advisor is necessary and what expertise would best serve the dispute, ensuring a balanced approach that avoids unnecessary complications or costs.
- SPEDR Model Clause on Confidentiality
Safeguards confidentiality in the arbitration process, especially important for cases involving sensitive or proprietary information.
Key Features:
- All aspects of the proceedings, including the existence of the arbitration, non-public information, and awards, are to be kept confidential.
- Certain exceptions allow disclosures when legally required, to protect a legal right, or when seeking professional services.
- The arbitral tribunal can issue orders to protect confidentiality, particularly concerning sensitive business information like trade secrets.
- Participants involved in the arbitration (e.g., witnesses, experts) must also agree in writing to maintain confidentiality.
Including the SPEDR Model Clause on Confidentiality in contracts provides several benefits, including:
- Protection of Sensitive Information, safeguarding proprietary and/or confidential information shared during the arbitration process.
- Establishing clear legally binding guidelines on the handling of confidential information, reducing the risk of unintentional breaches.
- Maintaining the integrity of the arbitration process by preventing external interference or influence.
- Enhancing trust between parties, encouraging open communication and full disclosure without fear of exposure.
This clause is especially valuable in industries where proprietary information, trade secrets, and sensitive data are frequently exchanged – such as technology, pharmaceuticals, finance. By incorporating this Model Clause, businesses can protect critical intellectual property and sensitive business strategies from unauthorized disclosure during arbitration. This protection is essential for maintaining a competitive edge, ensuring compliance with regulatory requirements, and fostering trust among parties, which is crucial for open and effective communication throughout the dispute resolution process.
Dispute resolution lawyers are can assist with incorporating confidentiality clauses in contracts. We can help tailor confidentiality clauses to mitigate the potential risks identified related to information disclosure and offer enforcement strategies to address potential breaches. This is achieved, inter alia, by ensuring that the clause clearly defines what information is protected and ccomplies with applicable laws and regulations, so that it is enforceable.
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With a dedicated focus on issues at the intersection of technology and law, Lexters brings unique expertise in advising technology businesses on these matters. Our firm combines extensive experience in complex litigation and international arbitration (including ICC, ICSID, SIAC, and ICDR) with deep technical knowledge, particularly in emerging technologies, fintech, and IT infrastructure. As a team of U.S. and Romanian qualified lawyers fluent in six languages, we regularly assist technology companies with cross-border dispute resolution and strategic matters.
Liana Cercel, Counsel
Alexandru Stanescu, Partner
