INTERIM COOPERATIVE AGREEMENT
Form
10-Q
Exhibit
10.11
This
agreement is made this 28th
day of
October 1993 by and between Commonwealth Edison Company (“Edison”), an Illinois
corporation, and Northern Illinois Gas Company (“NI-Gas”), an Illinois
corporation, (collectively, “Utilities”) to provide an interim cooperative
arrangement for the Utilities to address certain issues at certain former
manufactured gas plant (“MGP”) sites in Illinois.
1.1
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If
either of the Utilities believes that costs should be incurred
at one or
more MGP sites listed on Attachment A (“Site List”), it shall contact the
other and the Utilities shall meet as soon as reasonably possible
to
discuss whether they agree that costs should be incurred and, if
so, the
nature of those costs. If the Utilities reach agreement on those
issues,
each of the Utilities shall pay 50% of the agreed upon costs (“Interim
Cost Allocation”), subject to the final allocation of costs between the
Utilities pursuant to Sections 4, 5 and 6 of this Agreement (“Final Cost
Allocation”). If either of the Utilities believes that an MGP site should
be added to the Site List, it shall contact the other and the Utilities
shall meet as soon as reasonably possible to discuss whether they
agree
that the site should be added.
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1.2
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If,
after discussion, the Utilities do not agree that costs should
be incurred
for a particular site listed on Attachment A, they may pursue or
continue
to pursue any and all rights which they would otherwise have under
applicable law; provided, however, that neither of the Utilities
may
commence litigation against the other regarding any site on the
Site List
unless this Agreement has been terminated in accordance with Section
14
or
unless ninety (90) days before the Utility intends to commence
such
litigation it sends the other Utility, by telecopy and U.S. mail,
written
notice of such intent (“Initial Litigation Notice”). The Initial
Litigation Notice shall specify the MGP site or sites that would
be the
subject of the litigation, and the Utility sending such notice
may
commence litigation on the ninetieth (90th)
day after the date of the Initial Litigation Notice (said 90th
day being hereinafter called the “Litigation Date”). On the Litigation
Date, the Utility that received the Initial Litigation Notice may
commence
litigation against the other Utility regarding any MGP site or
sites on
the Site List, provided that within forty (40) days of the date
of the
Initial Litigation Notice the Utility receiving such notice sent
the other
Utility written notice (“Responsive Litigation Notice”), by telecopy and
U.S. main, of its intent to commence litigation, including an
identification of the site or sites that would be the subject of
the
litigation to be initiated by it. If a Utility commences litigation
in
accordance with this Section 1 without terminating this Agreement
in
accordance with Section 14, this Agreement shall be terminated
with regard
to the site or sites subject to the litigation (“Termination of Agreement
for Litigated Sites”), and the provisions of Section 14 (b) and (c) shall
be applicable to such termination. A Utility may not commence litigation
in accordance with this Section 1 for a site for which any arbitration
proceeding has begun under this
Agreement.
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2.1
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The
Utilities in the Interim and Final Cost Allocation under this Agreement
shall seek recovery from each other solely for Shared Costs, which
shall
be defined as third party costs of investigation and/or remediation
of a
particular MGP site (which investigation and/or remediation has
been
agreed to by both Utilities in accordance with Section 1 of this
Agreement) and any expenditures incurred by the Coordinator/Utility
for
audits under Section 17(b) or in prosecuting, defending, compromising,
settling or paying suits or claims pursuant to Section 2.4 of Attachment
C. Examples of Shared Costs are the costs of third party investigation
and/or remediation of an MGP site (which the Utilities have agreed
to
perform in accordance with Section 1 of this Agreement) pursuant
to:
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a)
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a
work plan agreed upon by the Utilities in accordance with Attachment
C;
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b)
a
work
plan ordered by a federal or state regulatory agency;
or
c)
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a
work plan ordered by a court with appropriate jurisdiction, involving
litigation with a third party.
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2.2
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Examples
of costs that are not Shared Costs under this Agreement
are:
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a)
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a
Utility’s payroll costs, overhead or internal or external legal costs
(except for external legal costs that the Defending Utility may
incur in
accordance with Section 2.4 of Attachment
C);
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b)
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a
Utility’s ordinary costs of owning a particular former MGP site
(including, but not limited to, taxes, insurance, maintenance and
other
similar costs);
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c)
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costs
incurred by a Utility in pursuit of recovery of insurance proceeds
from
insurance carriers;
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d)
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costs
of prosecuting, defending, compromising or settling third party
litigation
relating to an MGP site, except to the extent allowed by Section
2.4 of
Attachment C; and
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e)
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costs
incurred by either Utility prior to the date of this Agreement,
unless the
Utilities have agreed pursuant to Section 3 to incur such
costs.
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2.3
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Nothing
in this Agreement shall limit the types of costs associated with
MGP sites
that one Utility can recover from the other in
litigation.
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3.1
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Edison
and NI-Gas have incurred and/or agree to incur the following costs
as
Shared Costs, subject to the terms of this Agreement, including,
but not
limited to, the Final Cost Allocation procedures set forth in Sections
4,
5 and 6 of this Agreement:
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a)
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the
cost of any settlement - acceptable to both Edison and NI-Gas --
and the
cost of any judgment entered against either or both Utilities in
Alcan-Toyo
America, Inc. v. Northern Illinois Gas Co.,
Xx. 00X 0000 (X.X. Ill. filed 10/27/92);
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b)
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the
cost of air monitoring - - and any other related activities acceptable
to
both NI-Gas and Edison - - at the Oak Park site; and
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c)
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the
cost of response activities - - acceptable to both NI-Gas and Edison
- -
at the Streator site.
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3.2
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The
following costs shall be subject to audit and final allocation
as Shared
Costs in accordance with Sections 4, 5 and 6 of this
Agreement:
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a)
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with
regard to the Streator site, approximately $700,000 of costs that
Edison
has incurred at the site prior to the date of this Agreement; and
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b)
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with
regard to the Alcan site, approximately $45,000 of costs that NI-Gas
has
incurred at the Alcan site prior to the date of this
Agreement.
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4.1 The
final
allocation of Shared Costs shall be determined on a site-by-site basis through
negotiation or arbitration as set forth in this Agreement, although the
Utilities may, if they so agree, aggregate individual sites for Final Cost
Allocation. If a Utility, pursuant to the Interim Cost Allocation, has paid
a
greater percentage of Shared Costs for an MGP site or group of sites than
is
allocated to it by the Final Cost Allocation, the other Utility shall pay
it the
difference between the amount it actually paid pursuant to the Interim Cost
Allocation and the amount allocated to it by the Final Cost Allocation. The
time
for Final Cost Allocation shall be determined as follows:
a)
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During
the twelve months following the completion of both a Phase I and
a Phase
II investigation at a particular site, the Utilities shall attempt
to
negotiate the final allocation of the Shared Costs already incurred
and
the estimated future costs to be incurred in any Phase III remediation.
If
the Utilities are unable to agree within such twelve months, either
Utility may seek binding arbitration as provided for in Section
5 after
the conclusion of such twelve months; or
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b)
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If
the Utilities have completed a Phase I investigation, either Utility
may
seek binding arbitration as provided for in Section 5 no earlier
than
three years following the completion of the Phase I investigation
at a
particular site; or
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c)
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If
the Utilities are unable to agree to continue to fund work at a
particular
site on a 50/50 interim allocation basis at anytime during Phase
I, Phase
II or Phase III, and for any reason (including, but not limited
to, an
inability to agree on a consultant or the type of remediation to
be
performed in Phase III), either Utility may commence arbitration
in
accordance with Section 5; but in no event prior to two years after
the
date of this Agreement; or
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d)
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By
Section 4.4 of Attachment C to this
Agreement.
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4.2
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For
purposes of this Section, Phase I, Phase II and Phase III are defined
as
follows:
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a)
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A
Phase I investigation is an investigation to collect data needed
to
adequately characterize an MGP site for the purpose of developing
and
evaluating effective response action alternatives. This investigation
may
be conducted in one or more stages.
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b)
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A
Phase II investigation is the process of evaluating the data from
the
Phase I investigation in order to select a response action. A Phase
II
investigation is complete when the Utilities have agreed upon a
response
action that will be implemented for MGP
site.
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c)
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A
Phase III remediation is the implementation of a response action
for a
site.
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5.1
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Subject
to Section 4, one Utility shall initiate the arbitration (“Initiating
Utility”) by requesting the Center For Public Resources, Inc. to send to
it and the other Utility a list of nine (9) potential arbitrators
(“List
of Potential Arbitrators”). The initiating Utility shall inform the Center
for Public Resources, Inc. that:
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a)
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Before
an arbitrator is included on the List of Potential Arbitrators,
the Center
for Public Resources, Inc. should confirm with the arbitrator that
he/she
(i) is interested in performing the arbitration and could do so
in
accordance with the schedule set forth in this Agreement, and (ii)
does
not have any conflict of interest that would interfere with impartial
decision making;
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b)
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Each
potential arbitrator must have legal training and experience in
environmental matters and contract dispute resolution; and
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c)
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The
List of Potential Arbitrators must be accompanied by a curriculum
vitae
for each arbitrator.
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5.2
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Within
thirty (30) days of receipt of the List of Potential Arbitrators
by both
Utilities, the Initiating Utility shall select an arbitrator from
it and
mail to the other Utility notice of the selection. Within forty-five
(45)
days of the receipt of the List of Potential Arbitrators the other
Utility
shall select an arbitrator from it and mail to the initiating Utility
notice of the selection. Within sixty (60) days of the receipt
of the List
of Potential Arbitrators, the Utilities shall meet to select a
third
arbitrator from the List of Potential Arbitrators. If the Utilities
cannot
agree on a third arbitrator during their meeting, before concluding
such
meeting they shall select an arbitrator by having each Utility—beginning
with the Initiating Utility—alternate in deleting one name from the List
of Potential Arbitrators until only one name remains (other than
the names
of the two (2) arbitrators previously selected by the Utilities).
That
name shall be the third arbitrator. The date such arbitrator is
selected
shall be the Commencement Date for purposes of
arbitration.
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5.3
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Each
party shall pay the costs of the arbitrator it has selected and
one-half
the costs of the third arbitrator together with its own costs of
arbitration. Such costs shall not be Shared Costs within the meaning
of
Section 2.
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6.1
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Within
ten (10) days of the Commencement Date, the Utilities shall provide
the
arbitrators a copy of this Section 6 and a copy of all publicly
available
documents or portions of such documents, including those obtained
from the
U.S. Environmental Protection Agency or the Illinois Environmental
Protection Agency, which the Utilities believe will provide the
arbitrators with useful background information about the site (or
sites)
that is the subject of the arbitration. If the Utilities disagree
regarding which documents should be provided to the arbitrators,
each
Utility may provide whatever documents it
chooses.
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6.2
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Within
thirty (30) days (“Document Production Date”) of the Commencement Date,
each Utility shall submit to the other all non-privileged documents
that
it has regarding the site (or sites) that is the subject of the
arbitration, as well as a certification—from its Vice President with
responsibility for environmental affairs—stating that the Utility is
providing all such documents.
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6.3
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Within
thirty (30) days after the Document Production Date, the Utilities
and the
arbitrators shall have a Scheduling Conference. At this conference,
the
Utilities and the arbitrators
shall:
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a)
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decide
what, if any, additional discovery shall be conducted and establish
a
schedule for such discovery;
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b)
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schedule
the filing of written testimony by the Utilities, a hearing for
cross-examination, the filing of memoranda by the Utilities prior
to oral
argument, the oral argument, the filing of a brief by each Utility
after
the oral argument, and the provision to the Utilities by the arbitrators
of the Final Cost Allocation Report (“FCAR”) which shall be binding on the
Utilities; and
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c)
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decide
any other issues that the Utilities and the arbitrators agree should
be
decided during the Scheduling Conference to facilitate the
arbitration.
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If
the
Utilities disagree about any matter discussed during the Scheduling Conference,
the arbitrators shall resolve such matter. The Utilities and the arbitrators
shall take all steps reasonably possible to ensure that the arbitration process
will be cost-effective, efficient and fair.
6.4
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Notwithstanding
any other provision of this Agreement, no Utility shall be required
to
disclose to the other Utility or to the arbitrators any communications
with, or work product of, its
attorneys.
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6.5
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The
arbitrators may, in their sole discretion, communicate in writing
with any
Utility to inquire about any gaps in the records, or to request
further
information on any matter relevant to the development of an allocation,
and shall provide a copy of such inquiry to the other Utility.
Each
Utility shall use its best efforts to comply in writing with an
inquiry by
the arbitrators pursuant to this paragraph and shall provide a
copy of its
response to the other Utility.
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6.6
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The
provisions of this Agreement shall govern arbitration performed
pursuant
to this Agreement; provided that the Center for Public Resources’ Rules
for Non-Administered arbitration of Business Disputes (1990) (“CPR’s
Rules”), shall govern the procedural issues, if any, that are not
addressed by this Agreement, although CPR’s Rules shall not govern any
action that Edison or NI-Gas may have against CPR or any arbitrator
in
connection with any arbitration performed under this Agreement.
In the
event of any conflict between the provisions of this Agreement
and the
procedural provisions of CPR’s Rules, this Agreement’s provisions shall
govern. CPR’s Rules are set forth in Attachment
B.
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6.7
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The
arbitrators shall be responsible for developing the Final Cost
Allocation
in accordance with the procedures set forth in this Agreement.
In
developing the Final Cost Allocation, the arbitrators shall consider
all
documents, information and comments or other evidence submitted
to or
solicited by the arbitrators pursuant to this
Agreement.
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6.8
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The
parties agree that notwithstanding the determination by the arbitrators
in
accordance with this Agreement, neither party shall be allocated
less than
20% or more than 80% of the Shared Costs in the Final Cost Allocation
and
the Final Cost Allocation Report. For
instance,
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a)
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a
determination by the arbitrators that one party should pay only
10% of the
total Shared Costs would mean that the party would be allocated
20% in the
Final Cost Allocation and FCAR, and the remaining party would be
allocated
80%; and
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b)
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a
determination that one party should be allocated 40% of the total
Shared
Costs would mean that the party would pay 40% and the remaining
party 60%
as the Final Costs Allocation. The arbitrators shall be informed
that in
no event shall the Final Cost Allocation of FCAR assign to either
party
less than 20% or more than 80% of the Shared
Costs.
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6.9
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The
agreement of a majority of the arbitrators shall be the judgment
of the
arbitrators.
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6.10
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The
FCAR tendered by the arbitrators shall be final and binding. If
one
Utility does not comply with the FCAR, the other Utility may have
judgment
entered thereon and the FCAR shall be enforced in or by any court
having
jurisdiction thereof. Such judgment shall be the judgment refered
to in
Section 7.1 and 7.4.
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6.11
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The
arbitrators’ sole responsibility shall be to determine an allocation of
the Shared Cost for the site or sites subject to the arbitration.
After a
Final Cost Allocation has been determined for a site, that allocation
shall binding upon the Utilities for all past or future Shared
Costs for
that site (incurred after the date of this Agreement or specified
in
Section 3) that the Utilities agree to incur, and/or for which
the
Utilities are legally liable. If one Utility decides that Shared
Costs
should be incurred at a site for which a FCAR has been issued,
but the
other Utility refuses to contribute to those costs, the former
Utility may
commence litigation against the latter Utility to establish the
latter’s
liability; provided, however, that if the latter Utility is found
liable,
the Shared Costs will be allocated among the Utilities pursuant
to the
FCAR. The arbitrators shall not have the right
to:
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a)
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enforce
an allocation;
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b)
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award
damages or punitive damages;
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c)
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grant
injunctive relief or specific performance;
or
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d)
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require
any Utility to follow a specific work plan or course of remediation
for a
particular site.
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6.12
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It
is the hope and intention of the parties that common questions
of fact and
law will not need to be arbitrated at each site and that after
one or two
arbitrations the parties will be able to stipulate as to such common
questions. Notwithstanding the foregoing, the doctrines of collateral
estoppel and res judicata shall not be applicable to any
arbitration.
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7.
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7.1
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The
parties agree that prejudgment interest shall be available to the
Utility
which is finally determined to have paid as its Interim Cost Allocation
more than its proportionate share of the final allocated Shared
Costs. For
example, if a Utility pay 50% of the interim allocated costs and
the final
Shared Costs allocated to that Utility represent 40% of that total,
the
Utility would be entitled to interest on 10% of the interim allocated
costs from the date of payment of such
costs.
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7.2
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Interest
shall be based on the U.S. Treasury rate for three year notes in
effect
from time to time from the date of this Agreement, plus 50 basis
points.
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7.3
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Interest
shall not be paid on amounts already incurred prior to the date
of this
Agreement by both parties as set forth in small subparagraphs a)
and b) of
Section 3.2 of this Agreement.
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7.4
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The
interest rate set forth in Section 7.2 shall also apply as post
judgment
until the judgment is paid.
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If
the
Utilities decide to incur costs at a site pursuant to the terms of this
Agreement, they shall:
a)
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select
mutually acceptable consultants for the performance of services
agreed to
by the Utilities;
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b)
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decide
whether one Utility will act as the coordinator of agreed upon
activities
involving the site (referred to as the Coordinator/Utility in Attachment
C) provided, however, that if a coordinator is selected, both Utilities
will participate in any significant decision making as more fully
set
forth in Attachment C;
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c)
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exchange
their technical information regarding that
site;
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d)
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cooperate
reasonably with each other regarding agreed upon activities involving
the
site as more fully set forth in Attachment
C;
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e)
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each
Utility will sign as a cogenerator of any manifests needed involving
the
removal of waste;
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f)
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cooperate
reasonably with each other in any proceedings (including prudence
reviews), regarding the recovery from ratepayer, insurance carriers,
or
other third parties of costs incurred pursuant to this Agreement,
which
cooperation shall include: (i) providing documents and information
regarding costs incurred and activities performed under this Agreement;
and (ii) allowing employees to testify regarding such costs and
activities; provided, however, that no Utility shall be required
to
disclose work product of or communications with the Utility’s legal
counsel.
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This
Agreement shall not constitute, nor be interpreted, construed or used as
evidence of any admission of liability, law or fact, or a waiver of any right
or
defense, provided, however, that:
a)
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except
as provided in Section 1 above, during the term of this Agreement,
neither
of the Utilities may commence litigation against the other regarding
claims associated with manufactured gas plants that arise from,
or are
related to, any of the sites on the Site List unless suit is brought
by a
third party or government agency against a Utility concerning a
site on
the Site List, in which case all claims, cross claims or third-party
claims may be brought by each Utility against the other; provided,
however, that to the maximum extent possible the Utilities shall
attempt
to resolve their differences under the terms of this
Agreement;
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b)
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neither
Edison nor NI-Gas will assert in any proceeding any challenges
to costs
that the Utilities agreed to incur after the date of this Agreement
or for
costs identified under Section 3 of this Agreement, including,
but not
limited to, challenges to the reasonableness of the costs or assertions
that the costs were not consistent with the National Contingency
Plan;
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c)
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during
the term of the Agreement, this Agreement tolls the statute of
limitations
for any cause of action that Edison or NI-Gas may have against
each other
regarding possible remediation arising from or relating to any
of the
sites on the Site List.
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The
Utilities agree that all activities undertaken pursuant to this Agreement
constitute negotiations for the purpose of compromise and settlement. Neither
the fact of participation of either Utility in the Agreement, nor any documents
or other information generated by either Utility or by the arbitrators pursuant
to this Agreement, may be introduced as evidence in any other proceeding,
except
in proceedings regarding a request for regulatory approval of the Agreement,
or
the recovery from ratepayers, insurance carriers or other third parties
(collectively, “Third Party Proceeding”) of costs incurred pursuant to this
Agreement and except for those documents or such information which is in
the
public domain or obtainable in accordance with the following provisions of
this
section. The arbitrators shall be prohibited from testifying on matters related
to an MGP site subject to arbitration under this Agreement or to this Agreement,
in any judicial or administrative proceeding, except for Third Party Proceedings
and except in proceedings to enforce the arbitration judgment. No Utility
may
call as a witness, or seek discovery from, the arbitrators, or any of the
arbitrators’ partners, agents, employees, or representatives, in any judicial or
administrative proceeding, except for Third Party Proceedings related to
an MGP
site subject to arbitration under this Agreement, or to this Agreement. Nothing
in this Agreement shall be construed to prohibit a Utility from using that
Utility’s own documents, publicly available documents or documents otherwise
available to the Utility other than from activities conducted under this
Agreement, in any judicial or administrative proceeding. Nothing in this
Agreement shall be construed to limit or otherwise affect the discovery rights
of any Utility to the Agreement against the other in any other proceeding
with
respect to documents or information not generated by the
arbitrators.
11.
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a)
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Except
as provided to the contrary in Section 10, each Utility agrees
that all
documents and information marked confidential and received from
the other
Utility or its counsel, pursuant to the Agreement, and all reports
and
communications from the arbitrator, shall be held in strict confidence
by
the receiving Utility.
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b)
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Each
Utility shall take all necessary and appropriate measures to ensure
that
any person who is granted access to any documents or information
received
pursuant to this Agreement is familiar with the confidentiality
terms of
this Agreement and complies with the confidentiality
obligation.
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c)
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The
confidentiality obligations of the Utility shall remain in full
force and
effect, without regard to whether a Utility terminates the Agreement,
or
this Agreement results in a final allocation among the parties.
The
provisions of this section shall not apply to information which
is now or
hereafter becomes public knowledge without violation of the Agreement,
which is sought and obtained from a Utility pursuant to applicable
discovery procedures and not otherwise protected from disclosure,
which is
available to a Utility other than from activities conducted under
this
Agreement, or which a Utility is required by law to disclose (provided
that the disclosing Utility notifies the other Utility of such
disclosure).
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d)
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The
submission of document or information to the arbitrators does not
constitute a waiver of any Utility’s right to argue that such documents or
information are not discoverable in another
proceeding.
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Each
Utility agrees that the disclosure of any documents or information to the
arbitrators or to another Utility shall not be deemed a waiver of the
attorney-client privilege, work product, joint defense or self-evaluation
or any
other privilege by the Utility providing the documents or
information.
13.
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The
Utilities may make provision for the addition of new parties after the effective
date of this Agreement. The Utilities may impose such additional terms and
conditions upon prospective new parties as may be agreed to by the
Utilities.
14.
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Either
of
the Utilities may terminate this Agreement upon sixty (60) days written notice
to the other, provided that:
a)
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any
arbitration proceeding begun prior to the termination of this Agreement
shall be concluded in accordance with this Agreement, notwithstanding
the
intervening termination;
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b)
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any
obligations the Utilities have incurred to third parties (e.g.,
contractors, government agencies) in accordance with this Agreement
will
not be terminated, and such obligations will be fulfilled in accordance
with the terms of this Agreement, unless both Edison and NI-Gas
agree to
such termination;
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c)
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The
following sections of this Agreement shall survive termination:
Section
6.10, 6.11, 7, 8(f), 9, 10, 11, 12, 15, 17, 19 through 23, and
Sections
2.5 and 4.5 of Attachment C.
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Nothing
herein shall be deemed to create a partnership, joint venture or principal/agent
relationship between Edison and NI-Gas.
This
Agreement and Attachments hereto (which Attachments are part of this Agreement)
constitute the entire understanding of Edison and NI-Gas with respect to
the
Agreement’s subject matter. No modification may be made to this Agreement except
one signed by both Utilities which expressly states that it is a modification
of
the Agreement.
17.
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a)
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The
Non-Coordinator/Utility, upon written notice to Coordinator/Utility
thirty
days in advance, shall have the right to audit the accounts and
records of
Coordinator/Utility and/or its contractors relating to the accounting
hereunder for any calendar year, within the twenty-four month period
following the end of such calendar year. Provided, however, that
the
Non-Coordinator/Utility must take written exception to and make
claim upon
the Coordinator/Utility for all discrepancies disclosed by said
audit
within said twenty-four month period. Where there are two or more
Non-Coordinators/Utilities, the Non-Coordinators/Utilities shall
make
every reasonable effort to conduct joint or simultaneous audits
in a
manner which will result in a minimum of inconvenience to the
Coordinator/Utility.
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b)
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In
the event that the Coordinator/Utility is required by law or under
the
Agreement to employ a public accounting firm to audit the records
of the
activities for which the Utility is the Coordinator/Utility, the
cost
thereof shall be a Shared Cost, and a copy of the audit shall be
furnished
to each Utility.
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c)
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Except
in the event that an audit is conducted under subparagraph b above,
the
cost shall be borne by the
Non-Coordinator/Utility.
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d)
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If
the Coordinator/Utility is subject to an audit required by the
Illinois
Commerce Commission, it shall notify the other Utility prior to
the
commencement of such audit.
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If
the
Utilities cannot reach agreement on any issue arising in connection with
this
Agreement, they will consider using alternative dispute resolution- -including,
but not limited to, mediation, arbitration, or reliance upon the decision
of a
mutually acceptable environmental consultant- -to resolve such
dispute.
This
Agreement shall be binding upon the successors and assigns of the Utilities;
provided that no Utility can assign its rights under the Agreement without
the
other Utility’s consent.
20.
|
This
Agreement shall be interpreted under the laws of the State of
Illinois.
21.
|
If
any
provision of this Agreement is deemed invalid or unenforceable, the balance
of
this Agreement shall remain in full force and effect.
The
effective date of this Agreement shall be October 28, 1993. This Agreement
may
be executed in multiple counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
23.
|
Nothing
in this Agreement shall be construed to waive any rights, claims, privileges,
or
defenses which any Utility shall have against any other Utility or any other
person or entity.
24.
|
Exchange
of Insurance Policies.
If
one Utility learns of the existence of a general liability insurance
policy which it believes may provide coverage to the other Utility
with
regard to an MGP Site, the former shall notify the latter of such
a
policy.
|
25.
|
The
captions in this Agreement are for convenience only and shall not affect
the
construction or interpretation of any term or provision hereof.
26.
|
If
the
Utilities incur Shared Costs that they agree that they need to incur prior
to
the approval or disapproval of this Agreement by the Illinois Commerce
Commission (to the extent such approval is required by Section 7-102 of the
Public Utilities Act), the Utilities shall act in accordance with this Agreement
with regard to such Shared Costs, including, but not limited to, the condition
that each Utility will pay, on an interim basis, 50% of the costs that it
agrees
to incur for a site.
Dated
October
25, 1993 Party:
Northern Illinois Gas Company_
By:_/s/
XXXXXXX X. XXXXXX Xxxxxxx
X. Xxxxxx, Vice President
(Name
and
Title)
Designated
Representative for Receipt of Notice and Invoices
Name:
Xxxxx
X. Xxxxxxxxx, Secretery
Address:
0000
Xxxxx Xxxx, Xxxxxxxxxx, XX 00000-0000
Telephone
Number: (000)
000-0000
Facsimile
Machine Number: (000)
000-0000
Dated
10/28/93 Party:
Commonwealth
Edison Company
By:
/s/ XXXXXX X. XXXXXXX Xxxxxx
X. Xxxxxxx, Senior Vice President
(Name
and
Title)
Designated
Representative for Receipt of Notice and Invoices
Name:
Xxxxxx
X. Xxxxxxxxx
Address:
Commonwealth
Edison Company, One First Xxxxxxxx Xxxxx, 00xx
Xxxxx,
Xxxxxxx, Xxxxxxxx 00000
Telephone
Number: (000)
000-0000
Facsimile
Machine Number: (000)
000-0000
Attachment
A
Former
MGP/Site Address
1.
|
Aurora
Gas Light Company
|
|
River
St. at North Avenue Bridge
|
Aurora
|
|
2.
|
Belvidere
Gas, Light & Fuel
|
|
Locust
Street
|
Belvidere
|
|
3.
|
Chicago
Heights Gas Company
|
|
17th&
State Street
|
Chicago
Heights
|
|
4.
|
Cicero
Gas Company
|
|
Xxxxxxx
& Xxxxxxxx
|
Xxx
Xxxx
|
|
0.
|
Coal
Products Manufacturing Company
|
|
North
Broadway
|
Lockport
|
|
6.
|
Freeport
Gas, Light & Coke Company
|
|
Liberty
& Xxxxxxx St.
|
Freeport
|
|
7.
|
Geneseo
Electric Light & Gas Company
|
|
Oakwood
& First St.
|
Geneseo
|
|
8.
|
Illinois
Northern Utility Company
|
|
Market
& 14th
|
DeKalb
|
|
9.
|
Illinois
Northern Utilities Company
|
|
227
Xxxxxx
|
Xxxxxxxx
|
|
10.
|
Joliet
Gaslight Company, Station B
|
|
North
Broadway & Xxxxxxx St.
|
Joliet
|
|
11.
|
Kankakee
Gas Company
|
|
Birch
& Xxxxxxxx St.
|
Kankakee
|
|
12.
|
LaGrange
Gas Company
|
|
00xx&
Xxxxx Xx.
|
XxXxxxxx
|
|
00.
|
Lemont
Gas, Light Company
|
|
Main
& Lockport Rd.
|
Lemont
|
|
14.
|
Lincoln
Water, Light & Gas Company
|
|
Sangamon
& Dacatur St.
|
Lincoln
|
|
15.
|
Lockport
Gas Company
|
|
17th&
I & M Canal
|
Lockport
|
NOTE:
Edison and NI-Gas are not admitting liability at any of these sites, or waiving
any rights or defenses.
Former
MGP/Site Address (cont’d)
16.
|
Mendota
Gas Company
|
|
Fifth
St. & Ninth Ave.
|
Mendota
|
|
17.
|
Xxxxxx
Gas Company
|
|
Nettle
& Xxxxxxx St.
|
Xxxxxx
|
|
18.
|
Xxxxxxxx
Gas & Electric
|
|
Market
& S. Orange
|
Xxxxxxxx
|
|
19.
|
Northwestern
Gas, Light & Coke Company
|
|
000
Xxxxx Xx.
|
Xxxxxxxx
|
|
20.
|
Northwestern
Gas, Light & Coke Company
|
|
Maple
& Vermont
|
Blue
Island
|
|
21.
|
Northwestern
Gas, Light & Coke Co./
|
|
Niles
Center Station
|
||
Oakton
St. & XxXxxxxxx Blvd.
|
Skokie
|
|
22.
|
Ottawa
Gas, Light & Coke Company
|
|
Illinois
& Xxxxxx St.
|
Ottawa
|
|
23.
|
Pontiac
Light & Water Company
|
|
Xxxxxxxxxx
& Water St.
|
Pontiac
|
|
24.
|
Streator
Gas, Light & Coke Co.
|
|
Water
St. & Xxxxxxxxxx Xx.
|
Streator
|
NOTE:
Edison and NI-Gas are not admitting liability at any of these sites, or waiving
any rights or defenses.
CPR
LEGAL
PROGRAM
TO
DEVELOP ALTERNATIVES TO LITIGATION
RULES
AND
COMMENTARY FOR NON-ADMINISTERED
ARBITRATION
OF BUSINESS DISPUTES
CENTER
FOR PUBLIC RESOURCES, INC.
000
Xxxxxxx Xxxxxx Xxx Xxxx, X.X. 00000 Tel (000) 000 0000 Fax (000) 000
0000
CPR
COMMITTEE ON PRIVATE ADJUDICATION
XXXXXX
XXXXX, CHAIRMAN
Xxxx
& Xxxxxx
XXXXXXX
D.C. BEST
LeBoeuf,
Lamb, Xxxxx & XxxXxx
XXXXXXX
XXXXXXXX
Xxxxxx,
Xxxx & Xxxxxxxx
XXXXXXX
XXXXXXXXX
Senior
Vice President and Director of Litigation
Bank
of
America
XXXXXX
XXXXX
O’Melveny
& Xxxxx
XXXXXX
XXXXXX
Vice
President and General Counsel
Wisconsin
Electric Power Company
XXXXX
X. GROTON
Xxxxxxxxxx,
Xxxxxx & Xxxxxxx
XXXXXXXX
X. XXXXXXXX
Xxxxxx,
Xxxxxxxx & Xxxxxxxx
XXXXXXX
D. XXXXX
Xxxxxxx
Leisure Xxxxxx & Irvine
THE
XXXXXXXXX XXXXXX X. XXXXXX
Xxxxx
& Xxxxxxx
XXXXXXX
X. XXXXXXXX
McCutchen,
Doyle, Xxxxx & Enersen
XXXXXXXXX
XXXXXXX XXXXXXXXX
Columbia
Law School
XXXX
X. XXXXXXXX
Xxxxxx
Xxxxxxx & Xxxx
XXXXXX
VON XXXXXX
Xxxxxxxxx
& Xxxxxxxx
XXXXXXXX
X. XXXXXXXXX
Vice
President and General Counsel
General
Xxxxx, Inc.
CPR
STAFF
XXXXX
X. XXXXXXX
Senior
Vice President
TABLE
OF CONTENTS
INTRODUCTION
STANDARD
PROVISIONS
A.
|
Pre-dispute
Clause
|
B.
|
Existing
Dispute Submission Agreement
|
THE
RULES
A.
|
General
and Introductory Rules
|
Rule
1. Scope
of
Application
Rule
2. Notices
Rule
3. Commencement
Rule
4. Representation
B.
|
Rules
with Respect to the Tribunal
|
Rule
5. Selection
of Arbitrators by the Parties
Rule
6. Selection
of Arbitrators by CPR
Rule
7. Qualifications,
Challenges and Replacement of Arbitrators
Rule
8. Challenges
to the Jurisdiction of the Panel
C.
|
Rules
with Respect to the Conduct of the Arbitral
Proceedings
|
Rule
9. General
Provisions
Rule
10. Discovery
Rule
11. Evidence
and Hearings
Rule
12. Interim
Measures of Protection
Rule
13. The
Award
D.
|
Miscellaneous
Rules
|
Rule
14. Failure
to Comply with Rules
Rule
15. Costs
Rule
16. Confidentiality
Rule
17. Settlement
and Mediation
Rule
18. Actions
against CPR or Arbitrators
Rule
19. Waiver
CENTER
FOR PUBLIC RESOURCES
RULES
FOR NON-ADMINISTERED
ARBITRATION
OF BUSINESS DISPUTES
INTRODUCTION
These
Rules for Non-Administered Arbitration of Business Disputes (the “Rules”) have
been developed by a committee of leading arbitrators and practitioners convened
by the Center for Public Resources (“CPR”) and have been adopted by CPR. CPR
itself will not undertake to function as an administrative body with respect
to
the Rules. Under the Rules, CPR’s responsibilities are limited to acting as the
appointing authority in certain circumstances (see Rule 6) and deciding
challenges to an arbitrator (see Rule 7.7).
The
Rules, which are intended in particular for use in complex commercial
arbitrations, may be adopted by parties wishing to do so by using one of the
following standard provisions:
A.
Pre-dispute Clause
“Any
controversy or claim arising out of or relating to this contract, or the breach,
termination or validity thereof, shall be settled by arbitration in accordance
with the Center for Public Resources Rules for Non-Administered Arbitration
of
Business Disputes, by (a sole arbitrator) (three arbitrators, of whom each
party
shall appoint one) (three arbitrators, none of whom shall be appointed by either
party). The arbitration shall be governed by the United States Arbitration
Act,
9 U.S.C. § 1-16, and judgment upon the award rendered by the Arbitrator(s) may
be entered by any court having jurisdiction thereof.”
B.
Existing Dispute Submission Agreement
“We,
the
undersigned parties, hereby agree to submit to arbitration in accordance with
the Center for Public Resources Rules for Non-Administered Arbitration of
Business Disputes (the “Rules”) the following controversy:
[Describe
briefly]
We
further agree that the above controversy shall be submitted to (a sole
arbitrator) (three arbitrators, of whom each party shall appoint one) (three
arbitrators, none of whom shall be appointed by either party). We further agree
that we shall faithfully observe this agreement and the Rules and that we shall
abide by and perform any award rendered by the arbitrator(s). The arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C. § 1-16, and
judgment upon the award may be entered by any court having jurisdiction
thereof.”
The
Rules
are designed to provide a procedural basis for the settling of disputes. They
are not intended to change substantive provisions of applicable law. Therefore,
it is recommended that parties consider the inclusion in their agreement of
specific clauses as to the place of arbitration and as to the law governing
the
contract and the arbitration.
RULES
FOR ARBITRATION
A.GENERAL
AND INTRODUCTORY RULES
1.1
Where
the parties to a contract have provided for arbitration under the Rules, they
shall be deemed to have made these Rules a part of their arbitration agreement,
except to the extent that they have agreed in writing, or on the record during
the course of the arbitral proceeding, to modify these Rules. These Rules,
and
any amendment thereof adopted by CPR, shall apply in the form obtaining at
the
time the arbitration is commenced.
1.2
These
Rules shall govern the arbitration except that where any of these Rules is
in
conflict with a mandatory provision of applicable law, that provision of law
shall prevail.
2.1
Notices
shall be given in writing at the address specified in writing by the recipient
or, if no address has been specified, to the then business or residence address
of the recipient. Notices may be given by mail, telex or facsimile transmission.
Notices shall be deemed to have been received on the date of
delivery.
2.2
Time
periods specified by these Rules or established by the Arbitral Tribunal (the
“Tribunal”) shall start to run on the day a notice is received, unless the
Tribunal shall specifically provide otherwise.
3.1
The
party commencing arbitration (the “Claimant”) shall address to the other party
(the “Respondent”) a notice of arbitration.
3.2
The
arbitration shall be deemed commenced on the date on which the notice of
arbitration is received by the Respondent.
3.3
The
notice of arbitration shall include in the text or in attachments
thereto:
(a)
The full
names, descriptions and addresses of the parties;
(b)
A demand
that the dispute be referred to arbitration pursuant to the Rules;
(c)
The
verbatim text of the arbitration clause or the separate arbitration agreement
that is involved;
(d)
A
statement of the general nature of the claimant’s claim;
(e)
The
relief or remedy sought; and
(f)
The name
and address of the arbitrator appointed by the Claimant, unless the parties
have
agreed that neither shall appoint an arbitrator.
3.4
Within
twenty days after receipt of the notice of arbitration, the Respondent shall
deliver to the Claimant a notice of defense. Failure to deliver a notice of
defense shall not delay the arbitration; in the event of such failure, all
claims set forth in the demand shall be deemed denied.
3.5
The
notice of defense shall include:
(a)
Any
comment on items (a), (b), and (c) of the notice of arbitration that the
Respondent may deem appropriate;
(b)
A
statement of the general nature of the Respondent’s defense; and
(c)
The name
and address of the arbitrator appointed by the Respondent, unless the parties
have agreed that neither shall appoint an arbitrator.
3.6
The
Respondent may include in it’s notice of defense any counterclaim within the
scope of the arbitration clause. If it does so, the counterclaim in the notice
of defense shall include items (a), (b), (c), (d) and (e) of Rule
3.3.
3.7
If a
counterclaim is asserted, within twenty days after receipt of the notice of
defense, the Claimant shall deliver to the Respondent a reply to counterclaim
which shall have the same elements as provided in Rule 3.5 for the notice of
defense.
3.8
Claims
or counterclaims may be freely added or amended prior to the establishment
of
the Tribunal and thereafter with the consent of the Tribunal. Notices of defense
or replies to amended claims or counterclaims shall be delivered within twenty
days after the addition or amendment.
3.9
If a
dispute is submitted to arbitration pursuant to a submission agreement, Rule
3
shall apply to the extent that it is not inconsistent with the submission
agreement.
4.1
The
parties may be represented or assisted by persons of their choice.
4.2
Each
party shall communicate the name, address and function of such persons in
writing to the other party and to the Tribunal.
B.
RULES WITH RESPECT TO THE TRIBUNAL
5.1
Unless
the parties have agreed in writing on a Tribunal consisting of a sole arbitrator
or of three arbitrators not appointed by the parties, the Tribunal shall consist
of two arbitrators appointed by the parties and a third arbitrator, who shall
chair the Tribunal, selected as provided in Rule 5.2.
5.2
As soon
as possible after the appointment of two party-appointed arbitrators and
delivery of the notice of defense provided for in Rule 3.4 and in any event
within fifteen days thereafter, the party-appointed arbitrators shall discuss
potential candidates for the third arbitrator and shall proceed to select the
third arbitrator. They shall attempt to make their selection within twenty
days
of their initial discussion, but they may extend their selection process until
one or both of them have concluded, and have so advised the appointing parties,
that a deadlock has been reached. In this event, the third arbitrator shall
be
selected as provided in Rule 6.
6.1
Whenever
(i) a party has failed to appoint the arbitrator to be appointed by it; (ii)
the
parties have failed to appoint the arbitrators to be appointed by them acting
jointly; (iii) the party appointed arbitrators have failed to appoint the third
arbitrator; or (iv) the parties have provided that one or more arbitrators
shall
be appointed by CPR, the arbitrator(s) required to complete the Tribunal shall
be selected as provided in Rule 6, and either party may request CPR in writing,
with copy to the other party, to proceed pursuant to Rule 6.
6.2
The
written request may be made as follows:
(a)
If a
party has failed to appoint the arbitrator to be appointed by it, or the parties
have failed to appoint the arbitrator(s) to be appointed by them through
agreement, at any time after such failure has occurred.
(b)
If the
party-appointed arbitrators have failed to appoint the third arbitrator, as
soon
as the procedure contemplated by Rule 5.2 has been completed.
(c)
If the
arbitrator(s) are to be appointed by CPR, as soon as the arbitration has been
commenced.
6.3
The
written request shall include complete copies of the notice of arbitration
and
the notice of defense or, if the dispute is submitted under a submission
agreement, a copy of the agreement supplemented by the notice of arbitration
and
notice of defense if they are not part of the agreement.
6.4
CPR
shall then proceed as follows:
(a)
Promptly
following receipt by it of the request provided for in Rule 6.3, CPR shall
convene the parties in person or by telephone one or more times to attempt
to
select the arbitrator(s) by agreement of the parties.
(b)
If the
procedure provided for in (a) does not result in the selection of the required
number of arbitrators, CPR shall submit to the parties a list of not less than
five candidates if one arbitrator remains to be selected, and of not less than
seven candidates if two or three arbitrators are to be selected. Such list
shall
include a brief statement of each candidate’s qualifications. Each party shall
number the candidates in order of preference, shall note any objection it may
have to any candidate, and shall deliver the list so marked to CPR. Any party
failing without good cause to return the candidate list so marked within ten
days after receipt shall be deemed to have assented to all candidates listed
thereon. CPR shall designate as arbitrator(s) the nominee(s) willing to serve
for whom the parties collectively have indicated the highest preference and
who
does not appear to have a conflict of interest. If a tie should result between
two candidates, CPR may designate either candidate. If this procedure for any
reason should fail to result in designation of the required number of
arbitrators, CPR shall appoint a person or persons whom it deems qualified
to
fill any remaining vacancy.
7.1
Each
arbitrator shall be independent and impartial.
7.2
By
accepting appointment, each arbitrator shall be deemed to be bound by these
Rules and any modification agreed to by the parties.
7.3
Each
arbitrator shall promptly disclose in writing to the Tribunal and the parties
any circumstances that might cause doubt regarding the arbitrator’s independence
or impartiality. Such circumstances include bias, interest in the result of
the
arbitration, and past or present relations with a party or its
counsel.
7.4
Any
arbitrator may be challenged if circumstances exist or arise that give rise
to
justifiable doubt regarding that arbitrator’s independence or impartiality,
provided,
that a
party may challenge an arbitrator whom it has appointed only for reasons of
which it becomes aware after the appointment has been made.
7.5
A party
may challenge an arbitrator only by a notice in writing to the Tribunal, with
copy to the other party, given no later than fifteen days after (i) the parties
have been notified that the Tribunal has been constituted, or (ii) the
challenging party has become aware of the circumstances specified in Rule 7.4,
whichever shall last occur. The notice shall state the reasons for the challenge
with specificity.
7.6
When an
arbitrator has been challenged by a party, the other party may agree to the
challenge or the arbitrator may voluntarily withdraw. Neither of these actions
implies acceptance of the validity of the challenge.
7.7
If
neither agreed disqualification nor voluntary withdrawal occurs, the challenge
shall be decided as follows:
(a)
By
unanimous vote of the remaining members of the Tribunal;
(b)
If the
Tribunal consists of a sole Arbitrator or fails or refuses to decide the
challenge, by the President of CPR.
7.8
In the
event of death, resignation or successful challenge of an arbitrator, a
substitute arbitrator shall be selected pursuant to the procedure by which
the
arbitrator being replaced was selected.
7.9
In the
event that an arbitrator fails to act, or in the event the Tribunal determines
that an arbitrator is de jure
or
de facto
prevented from duly performing the functions of an arbitrator, the procedures
provided in Rule 7.8 shall apply to the selection of a replacement.
7.10
If the
sole arbitrator or the chairman of the Tribunal is replaced, the successor
shall
decide the extent to which any hearings held previously shall be repeated.
If
any other arbitrator is replaced, the Tribunal in its discretion may require
that some or all prior hearings be repeated.
8.1
The
Tribunal shall have the power to hear and determine challenges to its
jurisdiction.
8.2
The
Tribunal shall have the power to determine the existence, validity or scope
of
the contract of which an arbitration clause forms a part, and/or of the
arbitration clause itself. For the purposes of challenges to the jurisdiction
of
the Tribunal, the arbitration clause shall be considered as separable from
any
contract of which it forms a part.
8.3
Any
challenges to the jurisdiction of the Tribunal, except challenges based on
the
award itself, shall be made not later than the notice of defense, or with
respect to a counterclaim, the reply to the counterclaim.
C.
RULES WITH RESPECT TO THE CONDUCT
OF
THE ARBITRAL PROCEEDINGS
9.1
Subject
to these Rules, the Tribunal may conduct the arbitration in such manner as
it
shall deem appropriate. The chairman shall be responsible for the organization
of arbitral conferences and hearings and arrangements with respect to the
functioning of the Tribunal.
9.2
The
proceedings shall be conducted in an expeditious manner. The Tribunal is
empowered to impose time limits it considers reasonable on each phase of the
proceeding, including without limitation the time allotted to each party for
presentation of its case and for rebuttal.
9.3
Except
as otherwise provided in these Rules or permitted by the Tribunal, no party
or
anyone acting on its behalf shall have any ex
parte
communication with any arbitrator with respect to any matter of substance
relating to the proceeding, or on any matter with the arbitrator it appointed,
except that a party and the arbitrator it appointed may confer regarding the
selection of the chairman of the Tribunal.
9.4
As
promptly as possible after the selection of the Tribunal, the Tribunal shall
hold an initial pre-hearing conference for the planning and scheduling of the
proceeding. The objective of this conference shall be to discuss all elements
of
the arbitration with a view to planning for its future conduct. Matters to
be
considered in the initial pre-hearing conference may include, inter alia,
the
following:
(a)
Procedural matters such as the timing and manner of any required discovery;
the
desirability of bifurcation or other separation of the issues in the
arbitration; the scheduling of conferences and hearings; the scheduling of
pre-hearing memoranda; the need for and type of record of conferences and
hearings, including the need for transcripts; the amount of time allotted to
each party for presentation of its case and for rebuttal; the mode, manner
and
order for presenting proof; the need for expert witnesses and how expert
testimony should be presented; and the necessity for any on-site inspection
by
the Tribunal;
(b)
The
early identification and narrowing of the issues in the
arbitration;
(c)
The
possibility of stipulations of fact and admissions by the parties solely for
purposes of the arbitration, as well as simplification of document
authentication; and
(d)
The
possibility of the parties engaging in settlement negotiations, with or without
the assistance of a mediator.
After
the
initial conference, further pre-hearing or other conferences may be held as
the
Tribunal deems appropriate.
9.5
In order
to define the issues to be heard and determined, the Tribunal may inter alia
make
pre-hearing orders for the arbitration and instruct the parties to file more
detailed statements of claim and of defense and pre-hearing
memoranda.
9.6
Unless
the parties have agreed upon the place of arbitration, the Tribunal shall fix
the place of arbitration. The award shall be deemed made at such place. Hearings
may be held and the Tribunal may schedule meetings, including telephone
meetings, wherever it deems appropriate.
The
Tribunal shall permit and facilitate such discovery as it shall determine is
appropriate in the circumstances, taking into account the needs of the parties
and the desirability of making discovery expeditious and cost-effective. The
Tribunal may issue orders to protect the confidentiality of proprietary
information, trade secrets and other sensitive information disclosed in
discovery.
11.1
The
Tribunal shall determine the manner in which the parties shall present their
cases. Unless otherwise determined by the Tribunal, the presentation of a
party’s case shall include the submission of a pre-hearing memorandum including
the following elements:
(a)
A
statement of facts;
(b)
A
statement of each claim being asserted;
(c)
A
statement of the applicable law upon which the party relies;
(d)
A
statement of the relief requested, including the basis for any damages claimed;
and
(e)
A
statement of the evidence to be presented, including the name, capacity and
subject of testimony of any witnesses to be called and an estimate of the amount
of time required for the witness’ direct testimony.
11.2
Evidence
may be presented in written or oral form as the Tribunal may determine is
appropriate. The Tribunal is not required to apply the rules of evidence used
in
judicial proceedings, provided,
however,
that
the Tribunal shall apply the lawyer-client privilege and the work product
immunity. The Tribunal shall determine the applicability of any privilege or
immunity and the admissibility, relevance, materiality and weight of the
evidence offered.
11.3
The
Tribunal, in its discretion, may require the parties to produce evidence in
addition to that initially offered. It may also appoint experts whose testimony
shall be subject to cross examination and rebuttal.
11.4
The
Tribunal shall determine the manner in which witnesses are to be examined.
The
Tribunal shall have the right to exclude witnesses from hearings during the
testimony of other witnesses.
12.1
At the
request of a party, the Tribunal may take such interim measures as it deems
necessary in respect of the subject matter of the dispute, including measures
for the preservation of assets, the conservation of goods or the sale of
perishable goods. The Tribunal may require security for the costs of such
measures.
12.2
A
request for interim measures by a party to a court shall not be deemed
incompatible with the agreement to arbitrate or as a waiver of that
agreement.
13.1
The
Tribunal may make final, interim, interlocutory and partial awards. An award
may
grant any remedy or relief which the Tribunal deems just and equitable and
within the scope of the agreement of the parties, including but not limited
to
specific performance of a contract. With respect to any interim, interlocutory
or partial award, the Tribunal may state in its award whether or not it views
the award as final, for purposes of any judicial proceedings in connection
therewith.
13.2
All
awards shall be in writing and shall state the reasoning on which the award
rests unless the parties agree otherwise. When there are three arbitrators,
the
award shall be made and signed by at least a majority of the arbitrators; and
if
the award decides a number of issues, the part of the award relating to each
issue shall be made and signed by at least a majority of the
arbitrators.
13.3
A member
of the Tribunal who does not join in an award may file a dissenting opinion.
Such opinion shall not constitute part of the award.
13.4
Executed
copies of awards and of any dissenting opinion shall be delivered by the
Tribunal to the parties.
13.5
Within
fifteen days after receipt of the award, either party, with notice to the other
party, may request the Tribunal to correct in an award any errors in
computation, any clerical or typographical errors, or any errors of a similar
nature.
Within
thirty days after the delivery of an award to the parties, the Tribunal may
make
corrections on its own initiative and corrections requested by either party.
All
such corrections shall be in writing, and the provisions of Rule 13 shall apply
to them.
13.6
After
expiration of the thirty-day period provided in Rule 13.5, awards shall be
final
and binding on the parties, and the parties undertake to carry out awards
without delay.
13.7
The
dispute should in most circumstances be submitted to the Tribunal for decision
within six months after the initial pre-hearing conference required by Rule
9.4.
The final award should in most circumstances be rendered within one month
thereafter. The parties and the arbitrators shall use their best efforts to
comply with this schedule.
D.
MISCELLANEOUS RULES
Rule
14. Failure to Comply with Rules
Whenever
a party fails to comply with these Rules in a manner deemed material by the
Tribunal, the Tribunal shall fix a reasonable period of time for compliance
and,
if the party does not comply within said period, the Tribunal may impose a
remedy it deems just, including an award on default. Prior to entering an award
on default the Tribunal may require the non-defaulting party to produce evidence
and legal argument in support of its contentions, which the Tribunal may receive
without the defaulting party’s presence or participation.
15.1
Each
arbitrator shall be compensated at an hourly rate determined at the time of
appointment for all time spent in connection with the proceeding and shall
be
reimbursed for any travel and other expenses.
15.2
The
Tribunal shall fix the costs of arbitration. The costs of arbitration
include:
(a)
The fees
and expenses of member of the Tribunal;
(b)
The
costs of expert advice and other assistance engaged by the
Tribunal;
(c)
The
travel and other expenses of witnesses to such extent as the Tribunal may deem
appropriate;
(d)
The
costs for legal representation and assistance and experts of the successful
party to such extent as the Tribunal may deem appropriate;
(e)
The
charges and expenses of CPR with respect to the arbitration.
(f)
The
costs of transcript; and
(g)
The
costs of meeting and hearing facilities.
15.3
Subject
to any agreement between the parties to the contrary, the Tribunal may apportion
the costs of arbitration between or among the parties in such manner as it
deems
reasonable taking into account the circumstances of the case, the conduct of
the
parties during the proceeding, and the result of the arbitration.
15.4
The
Tribunal may request each party to deposit an equal amount as an advance for
the
costs referred to in Rule 15.2, except those specified in subparagraph (d),
and,
during the course of the proceeding, it may request supplementary deposits
from
the parties. Any such funds shall be held and disbursed in such a manner as
the
Tribunal may deem appropriate.
15.5
If the
requested deposits are not paid in full within twenty days after receipt of
the
request, the Tribunal shall so inform the parties in order that jointly or
severally they may make the required payment. If such payment is not made,
the
Tribunal may suspend or terminate the proceedings.
15.6
After
the award has been rendered, the Tribunal shall return any unexpended balance
from deposits made to the parties as may be appropriate.
The
parties and the arbitrators shall treat the proceedings, any related discovery
and the decisions of the Tribunal, as confidential, except in connection with
a
judicial challenge to, or enforcement of, an award, and unless otherwise
required by law.
17.1
Either
party may propose settlement negotiations to the other party at any time. The
Tribunal may suggest that the parties explore settlement at such times as the
Tribunal may deem appropriate and shall suggest that they do so at or before
conclusion of the hearing. The Tribunal shall give such assistance in settlement
negotiations as the parties may request and the Tribunal may deem
appropriate.
17.2
With the
consent of the parties, the Tribunal at any stage of the proceeding may arrange
for mediation of the claims asserted in the arbitration by a mediator acceptable
to the parties. The Mediator shall be a person other than a member of the
Tribunal, unless the parties request and the Tribunal agrees that a member
of
the Tribunal designated by the parties may serve as Mediator. The Tribunal
may
provide the Mediator with whatever factual and legal material developed in
the
arbitration it deems appropriate and may permit the Mediator to attend
conferences and hearings held in connection with the arbitration. Unless the
parties agree otherwise, any such mediation shall be conducted under the CPR
Model Procedure for Mediation of Business Disputes.
Rule
18. Actions against CPR or Arbitrators
Neither
CPR nor any arbitrator shall be liable to any party for any act or omission
in
connection with any arbitration conducted under these Rules.
A
party
knowing of a failure to comply with any provision of these Rules and neglecting
to state its objections promptly waives any objection thereto.
COMMENTARY
ON CENTER FOR PUBLIC RESOURCES RULES
FOR
NON-ADMINISTERED ARBITRATION OF BUSINESS DISPUTES
INTRODUCTION
The
Center for Public Resources, Inc. (“CPR”) brings a distinct viewpoint to the
field of business dispute resolution. Its tenets:
1. Most
business disputes are best resolved privately and by agreement.
2.
|
Executives
should play a key role in business dispute resolution and should
approach
a dispute as a problem to be solved, not a contest to be
won.
|
3.
|
A
skilled and respected neutral third party can play a critical role
in
bringing about agreement.
|
4. Efforts
should first be made to reach agreement by unaided negotiation.
5.
|
If
such efforts are unsuccessful, resolution by a non-adjudicative procedure
such as mediation or the minitrial should next be pursued. These
procedures remain available even while litigation or arbitration
is
pending.
|
6.
|
If
adjudication by a neutral third party is required, a well conducted
arbitration proceeding usually is preferable to
litigation.
|
7.
|
During
an arbitration proceeding the door to settlement should remain open;
arbitrators should encourage the parties to discuss settlement, if
appropriate employing a mediator.
|
8.
|
Arbitration
proceedings often can be conducted efficiently by the arbitral tribunal
without administration by a neutral organization, or limiting the
role of
such an organization to assistance in arbitrator selection, if
required.
|
Primary
objectives of arbitration are to arrive at a just and enforceable result, based
on a private procedure that is
·
|
fair,
|
·
|
expeditious,
|
·
|
economical,
and
|
·
|
less
burdensome or adversarial than
litigation.
|
The
above
objectives are most likely to be achieved if the parties and their
attorneys
·
|
adopt
well designed rules of procedure;
|
·
|
select
skilled arbitrators who are able and willing to actively manage the
process;
|
·
|
limit
the issues to focus on the core of the dispute;
and
|
·
|
cooperate
on procedural matters even while acting as effective advocates on
substantive issues.
|
GENERAL
COMMENTARY ON THE RULES
The
CPR
Rules for Non-Administered Arbitration of Business Disputes (the “Rules”) were
developed by a committee (the “Committee”) of leading arbitrators and
practitioners convened by CPR to develop procedures to facilitate the conduct
of
arbitration fairly, expeditiously and economically. The Rules are designed
to be
easily comprehended. The Rules are intended in particular for the complex case
but are suitable regardless of the complexity of the case or the amount in
dispute.
The
Rules
reflect CPR’s view that disputants should make all reasonable efforts to resolve
their dispute by agreement. Rule 16 requires the Arbitral Tribunal (the
“Tribunal”) to suggest at or before conclusion of the hearing that the parties
engage in settlement negotiations, and authorizes the Tribunal to arrange
mediation with the consent of the parties.
The
standard arbitration clauses in the Rules have been drafted to make proceedings
under the Rules subject to the United States Arbitration Act, 9 U.S.C. § 1 et
seq. If parties desire a different law, or if the federal law does not apply
(where, for example, the underlying transaction is not “in commerce”), another
law should be specified. [See reference to Volt
x.
Xxxxxxxx
below at
page 8.]
Every
disputant wants to have a reasonable opportunity to develop and present its
case. Parties that choose arbitration over litigation do so in large part out
of
a need or desire for a proceeding that is also speedy and economical - factors
which tend to go hand in hand. The rules were designed with each of these
objectives in mind.
The
complexity of cases will vary greatly. In rules of general application it is
not
appropriate to fix hard and fast deadlines. Rule 13.7 commits the parties and
the arbitrator(s) to use their best efforts to assure that the dispute will
be
submitted to the Tribunal for decision within six months after the initial
pre-hearing conference, and that the final award will be rendered within one
month thereafter. Rule 9.2 empowers the arbitrator(s) to establish time limits
for each phase of the proceeding, including specifically the time allotted
to
each party for presentation of its case and for rebuttal.
Counsel
are expected to cooperate fully with the Tribunal and with each other to assure
that the proceeding will be conducted with civility in an efficient, expeditious
and economical manner. Rule 15 empowers the arbitrators in apportioning costs
to
take into account “the circumstances of the case.” This broad power is intended
to permit the arbitrators to apportion a greater share of costs than they
otherwise might to a party which has employed tactics the arbitrators consider
dilatory, or in other ways has failed to cooperate in assuring the efficient
conduct of the proceeding.
The
Rules
may be modified by written agreement. The Rules are designed for an arbitration
between two parties but may be amended to provide for a proceeding among three
or more parties.
The
Rules
are designed for “business disputes”. This term is intended to encompass
disputes of any nature between business enterprises, including not only
“commercial” disputes but also, by way of example, intellectual property
disputes, construction disputes, disputes between manufacturers and distributors
or franchisees, and disputes between joint venturers. The Rules may be adopted
by parties which did not have a contractual or other business relationship,
e.g.
for a patent infringement dispute. The Rules may even be employed to adjudicate
a dispute between a government agency and a contractor, subject to any legal
restraints on that government’s submission to arbitration. The parties may find
it appropriate to modify the Rules to adapt them to a specific type of
dispute.
The
principal functions normally performed by an organization administering
arbitration proceedings are to:
·
|
provide
a set of rules which the parties can adopt in a pre-dispute agreement
or
for an existing dispute;
|
·
|
provide
administrative staff to render impartial services required for smooth
case
handling and to insulate arbitrators from
parties.
|
·
|
provide
lists of persons from which arbitrators may be
chosen;
|
·
|
appoint
the arbitrator(s) if necessary;
|
·
|
decide
arbitrator conflict of interest challenges if
necessary;
|
·
|
determine
arbitrator fees and xxxx the parties for such
fees.
|
·
|
schedule
hearings and send notices of
hearings;
|
·
|
provide
hearing rooms;
|
·
|
distribute
documents;
|
·
|
review
awards for procedural comments.
|
The
charges of administering organizations typically are related to the amount
in
dispute, but rates vary.
Many
arbitration practitioners and arbitrators see a need for administered
arbitration, but others favor non-administered or “ad hoc” arbitration,
particularly for large or complex cases. They believe that the arbitrator(s)
and
the parties’ advocates are capable of performing most of the functions general
performed by the administering organization, and that the arbitrator(s) and
advocates often may be better able to control the conduct of the proceeding
than
such an organization. The fees charged by an administering organization also
may
be a factor. The assistance of a neutral third party may be needed in selecting
the tribunal or deciding a conflict of interest challenge to an arbitrator.
Under the Rules, CPR is available to perform these limited
functions.
Over
ninety percent of arbitrations take place pursuant to the parties’ binding
commitment in their business agreement to submit possible futures disputes
to
arbitration in accordance with specified rules. Once a dispute has arisen,
it is
usually much more difficult for the parties to agree on any alternative to
litigation. Our committee recommends the inclusion of a dispute resolution
clause in most business agreements. The parties should also consider whether
to
provide for administered or non-administered arbitration. Rules for administered
arbitration have long been available for incorporation by reference. The
availability of rules well designed for the efficient conduct of a
non-administered proceeding will facilitate the choice between these alternative
procedures.
The
Rules
are intended primarily for disputes between responsible parties which will
not
attempt to obstruct the process. However, the Rules do permit the process to
go
forward even if a respondent fails to deliver a notice of defense, fails to
participate in selection of the Tribunal, or ultimately fails to appear at
a
hearing.
SALIENT
FEATURES OF THE RULES
The
Rules
differ in numerous respects from arbitration rules promulgated by other
organizations. Features which our Committee considers particularly significant
are:
1.
|
The
Rules call for non-administered
arbitration.
|
2.
|
The
Rules require the expeditious conduct of the proceeding, empowering
the
arbitrator(s) to establish time limits for each phase of the proceeding
(Rule 9.2), and to penalize a party engaging in dilatory tactics
(Rule
15.3).
|
3.
|
All
arbitrators, including those appointed by either party, are required
to be
independent and impartial (Rule 7.1). Such a requirement enhances
the
acceptability of the arbitration process, albeit a departure from
existing
U.S. practice.
|
4.
|
The
parties are given ample opportunity to select a sole arbitrator or
a panel
of three arbitrators without intervention of CPR. If they fail, either
party may request CPR’s assistance (Rule
5).
|
5.
|
CPR
will first convene the parties to attempt to select the arbitrator(s)
by
agreement of the parties. Only if that attempt fails will CPR submit
a
list of candidates to the parties for ranking (Rule
6.4).
|
6.
|
The
Tribunal may decide challenges to its jurisdiction (Rule 8). This
should
allow arbitrators to decide all issues, including arbitrability questions,
without the necessity for court
intervention.
|
7.
|
The
chairman of the Tribunal is assigned responsibility for the organization
of conferences and hearings and arrangements with respect to the
functioning of the Tribunal (Rule
9.1).
|
8.
|
The
Tribunal is required to hold at least one pre-hearing conference
to plan
and schedule the proceeding (Rule 9.4). Such conference should result
in
the smooth scheduling of the case, and may aid possible
settlement.
|
9.
|
The
Tribunal is given great leeway in matters of procedure. The Tribunal
is
specifically empowered, for instance,
to
|
·
|
establish
time limits for each phase of the proceeding (Rule
9.2);
|
·
|
limit
the time allotted to each party for presentation of its case (Rule
9.2);
|
·
|
make
pre-hearing orders (Rule 9.5);
|
·
|
permit
such discovery as it deems appropriate (Rule
10);
|
·
|
require
the submission of pre-hearing memoranda (Rule
11.1);
|
·
|
require
evidence to be presented in written form (Rule
11.2).
|
10.
|
The
Tribunal is empowered to appoint neutral experts (Rule
11.3).
|
11.
|
The
Tribunal may take interim measures for the preservation of assets
or other
interim measures (Rule 12.1).
|
12.
|
The
Tribunal is required to state the reasoning on which its award rests
unless the parties agree otherwise (Rule 13.2). Our committee believes
the
parties are entitled to know how the decision was
reached.
|
13.
|
Each
arbitrator is to be fully compensated at an hourly rate determined
at the
time of appointment for all time spent in connection with the proceeding
(Rule 15.1).
|
14.
|
The
Tribunal is empowered to apportion costs, including attorneys’ fees and
other costs incurred by the successful party, between the parties,
taking
into account the circumstances of the case, the conduct of the parties
during the proceeding and the result (Rule
15.3).
|
15.
|
the
proceedings are confidential (Rule
16).
|
16.
|
The
Tribunal may suggest at any time that the parties engage in settlement
negotiations and shall make that suggestion at or before conclusion
of the
hearing (Rule 17.1).
|
17.
|
The
Tribunal may arrange for mediation of the dispute at any time with
the
consent of the parties (Rule 17.2).
|
The
Rules
were designed in the first instance for disputes between parties located in
the
United States; however, the Rules also are suitable for disputes involving
parties located in different countries. In the transnational context it may
be
advisable to specify in the pre-dispute clause or the submission
agreement:
·
|
the
place of arbitration;
|
·
|
the
language(s) in which the proceedings are to be
conducted;
|
·
|
the
substantive law governing the merits of the
dispute;
|
·
|
the
nationality of the arbitrator(s);
and
|
·
|
the
arbitration law which will govern.
|
The
parties also may consider certain modifications of the Rules when adopting
them
for transnational disputes. For instance, if the parties prefer that the
functions assigned to CPR under Rule 6 and Rule 7.7 (b) be performed by another
neutral organization or official, they may so provide.
STANDARD
CONTRACTUAL PROVISIONS
The
suggested standard pre-dispute clause and submission agreement which precede
the
Rules may be modified and may be supplemented. It is desirable that the parties
specify the place of arbitration and the law governing the contract and the
arbitration. If a governing law is specified it may be advisable to state
whether or not the conflict of laws rules of that law are included.
In
light
of the decision of the United States Supreme Court in Volt
Information Sciences, Inc. v Board of Trustees of Xxxxxx Xxxxxxxx Junior
University,
000 X.
Xx. 0000, _______ U.S. ________, No. 87-1318 (March 6, 1989), our Committee
has
inserted language in the standard pre-dispute clause and submission agreement
to
the effect that the governing law for the arbitration shall be the United States
Arbitration Act.
The
laws
of various jurisdictions differ on the question of whether arbitrators are
empowered to award punitive damages. If
the parties wish to preclude the arbitrators from awarding punitive or trebled
damages, it would be advisable to include a provision to that effect in the
pre-dispute clause or the submission agreement.
As
stated
above, CPR as a rule considers it highly desirable for disputants to attempt
to
resolve their dispute without adjudication. Attached to this commentary as
Appendix A are suggested contract clauses calling for negotiations or mediation
before
a
dispute is submitted to arbitration.
The
pre-dispute clause and the submission agreement call for an election as to
whether the Tribunal will be composed of
·
|
three
arbitrators, of whom each party appoints one, and the two arbitrators
thus
appointed attempt to select the
third,
|
·
|
three
arbitrators, none of whom are appointed by the parties,
or
|
·
|
a
sole arbitrator.
|
Such
an
election made in a pre-dispute clause may be changed by further agreement once
a
specific dispute has arisen. If the parties fail to make an election, the first
mentioned procedure will apply in accordance with Rule 5.1.
Rules
5
and 6 govern the selection of arbitrators not appointed by either
party.
It
is
essential for the parties to stipulate that judgment may be entered upon the
award, in order to comply with the requirement of the United States Arbitration
Act, 9 U.S.C. § 9.
COMMENTARY
ON INDIVIDUAL RULES
A. General
and Introductory Rules
Rule
3. Commencement of Arbitration
Rule
3
sets forth the procedure to be followed when a proceeding is commenced pursuant
to a pre-dispute arbitration clause. Under Rule 3.4, the arbitration will
proceed even if the respondent should fail to file a timely notice of defense.
If the pre-dispute clause required each party to appoint an arbitrator, and
either party fails to do so, the other party may request CPR to step in pursuant
to Rule 6.
A
submission agreement entered into after a dispute has arisen may include all
or
some of the material called for by Rules 3.3 and 3.5 and may eliminate the
need
for a notice of arbitration and a notice of defense. Rule 3.9 provides that
“Rule 3 shall apply to the extent that it is not inconsistent with the
submission agreement.” If the parties so desire, the submission agreement can
provide that Rule 3 notices will not be required or will be
modified.
It
is
assumed that parties normally would be represented by a law firm or an
individual attorney; however, the Rules permit parties to be represented or
assisted by any persons of their choice.
Under
the
laws of certain jurisdictions, representation of a party in an arbitration
proceeding may constitute the practice of law, in which case representation
by
an attorney would be required.
B. Rules
with Respect to the Tribunal
Most
practitioners, when confronted with a large or complex dispute, have greater
confidence in a panel of three arbitrators than in a single arbitrator.
Moreover, they usually
prefer
to
permit each party to appoint an arbitrator. Rule 5.1 provides, therefore, that
the Tribunal shall consist of two arbitrators appointed by the parties and
a
third arbitrator who shall chair the Tribunal, unless the parties have agreed
on
a Tribunal consisting of a sole arbitrator or three arbitrators not appointed
by
the parties.
For
many
companies the ability to select a tribunal well qualified to hear and decide
their dispute is a primary motivation to opt for arbitration. The selection
of
highly qualified, experienced arbitrators is critical, the more so if the amount
in dispute is large and the issues are complex. Our Committee believes that
at
least the chairman of the Tribunal usually should be a respected attorney
experienced in arbitration.
The
arbitrators should be persons able and willing to control the course of the
proceeding and to make definitive rulings on substantive and procedural
matters.
Sophisticated
counsel representing the parties are likely to know of the individuals,
especially of attorneys, who are well qualified and who meet the “independent
and impartial” standard of Rule 7.1. CPR has established Panels of leading
members of the bar, including former judges, who are highly qualified to serve
as arbitrators. CPR’s lists of panelists are available on request, and panel
members may be contacted directly.
Tribunals
of two arbitrators have been used on occasion, typically in complex
technological disputes in which the objective was to structure a modus vivendi
rather
than only to arrive at conclusions as to liability and damages. The Rules may
be
modified to provide for a two arbitrator Tribunal.
Selection
of arbitrators by the parties is the preferred course, and the parties are
given
ample opportunity to select a Tribunal without CPR’s assistance. However, if
they fail, either party may request CPR’s assistance at the time and in the
manner specified in Rules 6.2 and 6.3.
In
accordance with Rule 6.4(a), CPR then will convene the parties and will propose
candidates in an attempt to complete the Tribunal in this informal and speedy
manner. If this procedure is not wholly successful, CPR will submit a list
of
candidates to the parties in writing. The parties are required to rank the
nominees in order of preference. The nominee(s) willing to serve for whom the
parties collectively have indicated the highest preference will be
selected.
The
parties will be encouraged to inform CPR of the qualifications they seek in
an
arbitrator. Individuals nominated by CPR are likely to be members of CPR’s
Panels.
The
degree of independence expected of a party-appointed arbitrator in the United
States is not always clear. Parties often expect the arbitrator they appoint
to
act as their advocate on the panel. Our Committee does not favor this approach.
The Committee believes that the advocacy role should be performed exclusively
by
each party’s counsel or other representative, and that permitting arbitrators to
play such a role is prejudicial to the disinterested and candid deliberations
in
which the panel should engage. Consequently, Rule 7.1 states that “Each
arbitrator shall be independent and impartial.”
The
rationale for party appointment is to enable each party to select an individual
it considers well qualified and whom it expects in turn to select a capable
chairman of the Tribunal. A party may discuss the case in general terms with
an
individual before appointment, and the appointee may discuss the selection
of
the chairman with that party. Once the Tribunal has been constituted, no further
ex
parte
communication is permitted between a party and the arbitrator it appointed
(Rule
9.3).
Rules
7.3
- 7.7 set forth a formal procedure for disclosure of “circumstances that might
cause doubt regarding the arbitrator’s independence or impartiality,” and for a
challenge for “justifiable doubt,” after the Tribunal has been constituted. It
is anticipated that normally an individual’s possible conflicts of interest
would be disclosed and resolved informally before selection, and that it would
rarely become necessary to invoke the formal procedure. In general, we believe
all the arbitrators should be held to the standards for independent arbitrators
promulgated in the ABA-AAA Code of Ethics for Arbitrators in Commercial
Disputes.
Rule
8. Challenges to the Jurisdiction of the Tribunal
This
Rule
expresses the generally accepted principle that arbitrator(s) have the
competence initially to determine their own jurisdiction. The arbitrator(s)
will
decide whether the arbitration proceeds in the face of a jurisdictional
challenge.
C.
Rules with Respect to the Conduct of the Arbitral
Proceedings
Under
Rule 9.1 the chairman is “responsible for the organization of the arbitral
conferences and hearings and arrangements with respect to the functioning of
the
Tribunal.”
The
efficiency of the proceeding will depend in large part on the chairman’s taking
the lead in asserting the Tribunal’s control over critical aspects of the
procedure, including the setting of time limits as authorized by Rule
9.2.
The
Rules
give the Tribunal wide latitude as to the manner in which the proceeding will
be
conducted. It is expected that the procedure will be determined in large part
during the pre-hearing conference(s) held pursuant to Rule 9.4 and that
following the conference(s) the Tribunal will issue one or more orders on
procedural matters.
Narrowing
issues to those central to the controversy, fact stipulations and admissions
should be strongly encouraged by the Tribunal in the interest of focusing on
core issues and simplifying the proceeding.
Some
controversies hinge on one or two key issues of law which in litigation may
be
decided early on motion for partial summary judgment. At the pre-hearing
conference, the desirability of the Tribunal’s ruling on such issues before the
hearings can be considered.
Other
controversies hinge on a key issue of a technical nature on which a neutral
expert can be helpful in bringing about a resolution. The appointment by the
Tribunal of such an expert is authorized by Rule 11.3 and also can be discussed
at the pre-hearing conference.
The
Tribunal may bifurcate the proceeding. If the proceeding is bifurcated to first
decide the issue of liability, the parties then may well be able to agree on
the
remedy. Often parties have options not available to a judge or to
arbitrators.
A
pre-hearing conference may well give the arbitrators an opportunity to encourage
settlement discussions or mediation, as contemplated by Rule 17. Simply bringing
the attorneys together for purposes of a conference may lead to such
discussions.
Rule
10. Discovery
These
Rules, unlike most other arbitration rules, specifically empower the
Tribunal
“to
permit and facilitate such discovery as it shall determine is appropriate in
the
circumstances taking into account the needs of the parties and the desirability
of making discovery expeditious and cost-effective.”
Arbitration
is not for the litigator who will “leave no stone unturned.” Unlimited discovery
is incompatible with the goals of efficiency and economy. The Federal Rules
of
Civil Procedure are not applicable. Discovery should be limited to that for
which a party has a substantial, demonstrable need. Rule 11.2 provides for
the
application of the attorney-client privilege and the work product immunity.
That
protection is intended to apply to discovery as well as to
hearings.
It
is
desirable for the parties’ counsel to agree, preferably before the initial
pre-hearing conference, on a discovery plan and schedule and to submit the
same
to the Tribunal for its approval.
A
party
may encounter difficulties if it needs to secure documents or testimony from
an
uncooperative third party. The arbitrators may well be of assistance in such
a
situation through the exercise of their subpoena power or in other ways. If
the
third party’s location is beyond subpoena range, holding a hearing at that
location may be an option.
The
Rules
do not establish a detailed mandatory hearing procedure but permit the Tribunal
to determine the procedure. At least the main features should be established
during the pre-hearing conference(s). The Tribunal need not apply rules of
evidence used in judicial proceedings, except that the Tribunal is required
to
apply the attorney-client privilege and the work product immunity when it
determines that the same are applicable (Rule 11.2).
Self-authentication
of documentary exhibits the authenticity of which is not disputed is a widely
used practice which reduces hearing time. In cases in which voluminous testimony
is expected the hearings will be expedited considerably if the Tribunal requires
the direct testimony of all or most witnesses to be submitted in written form
before the witness is to appear. This procedure also enables opposing counsel
to
better prepare for cross-examination. Depositions and affidavits would be
admissible in evidence unless the Tribunal rules otherwise.
The
Tribunal should consider at the pre-hearing conference the imposition of time
limits on case presentation, as authorized by Rule 9.2. If necessary, any such
limits can be extended.
The
Rules
do not provide specifically for the notice the parties are to be given of
hearing dates and times. It is assumed that the Tribunal will give notice in
such form and with such lead time as is reasonable under the
circumstances.
The
efficiency of the proceeding will be enhanced substantially if hearings are
held
consecutively. If the Tribunal heeds every schedule conflict claim and
adjournment request by either counsel, the hearings may drag on quite
unnecessarily.
The
Tribunal and/or the parties are likely to request a hearing
transcript.
Rule
11.3
empowers the Tribunal to appoint neutral experts. We would expect this power
to
be exercised sparingly, and usually upon consultation with the parties as to
the
need for a neutral expert, the scope of the assignment, and identification
of
well qualified candidates. It is not intended that the expert give advice to
the
Tribunal ex parte;
indeed,
the Rule entitles the parties to cross examine and to rebut the expert. The
conflicting views of partisan experts can lead to confusion rather than
elightenment of arbitrators. In appropriate cases the arbitrators might
encourage the parties early on, e.g. at the pre-hearing conference, to agree
on
the joint appointment of a neutral expert.
The
Rules
do not automatically require the submission of post-hearing briefs, but it
is
likely that the Tribunal will order the submission of such briefs. Final oral
argument also may be scheduled.
The
Tribunal’s powers with respect to subpoenas are determined by applicable law and
are not dealt with specifically in the Rules.
Rule
13.2
provides:
“All
awards shall be in writing and shall state the reasoning on which the award
rests unless the parties agree otherwise. When there are three arbitrators,
the
award and any part thereof shall be made and signed by at least a majority
of
the arbitrators; …”
Most
parties engaging in arbitration want to know the basis on which the
arbitrator(s) reached their decision. Our Committee, moreover, considers it
good
discipline for arbitrators to require them to spell out their reasoning.
Sometimes this process gives rise to second thoughts as to the soundness of
the
result. The Rule 13.2 mandate gives the arbitrator(s) greater leeway than would
a requirement to state “conclusions of law and findings of fact.”
Some
parties hesitate to arbitrate out of a concern that arbitrators are prone to
“split the baby”, i.e. to make compromise awards. Any tendency on the part of
the arbitrators to reach compromise awards should be restrained by the
requirement of a reasoned award.
Certain
administering organizations and practitioners favor “bare” awards without
explanation of any sort, in the belief that such awards are the least likely
to
be challenged and overturned by a court. In the Committee’s view the risk that a
reasoned award will be successfully challenged normally is small and is
outweighed by the other considerations mentioned above.
If
an
award consists of two or more parts, it is sufficient if any two out of three
arbitrators approve each part, even if the same two arbitrators do not approve
each part.
Unless
the parties shall have agreed in their business agreement or otherwise as to
which law shall govern, the Tribunal is free to determine the law which is
to
govern the award.
Rule
13.7
requires the parties and the arbitrators to use their best efforts to submit
the
dispute to the Tribunal for decision within six months of the initial
pre-hearing conference, and to render the final award within one month following
such submission.
The
Rules
do not deal expressly with confirmation of an award, as the matter is covered
by
the United States Arbitration Act, 9 U.S.C. § 9 and its state
counterparts.
Rule
14. Failure to Comply with Rules
Rule
14
empowers the Tribunal to impose a remedy it deems just whenever a party
materially fails to comply with the Rules. The power to make an award on default
is specifically included. Pursuant to Rule 15.3 the Tribunal also may take
a
party’s conduct during the proceeding into account in assessing
costs.
Our
Committee believes that highly qualified arbitrators are entitled to be fully
compensated for all time devoted to the arbitration. If an arbitrator is a
member of a law firm, he is likely to expect compensation at approximately
the
hourly rates normally charged for his services. The rates payable to
party-appointed arbitrators should be agreed to between the appointee and the
appointing party. The rates of other arbitrators should be established by
agreement with both parties. The members of a three member Tribunal are likely
to be compensated at different rates, but gross variations may present
problems.
Normally,
the parties are expected to make advances for costs to a fund pursuant to Rule
15.4, and the arbitrators’ fees, as well as other expenses, would be paid from
such a fund.
The
“costs of arbitration” enumerated in Rule 15.2 include the costs for legal
representation and assistance and experts of the successful party to such extent
as the Tribunal may deem appropriate,
In
accordance with Rule 15.3, unless the parties otherwise agreed, the Tribunal
may
apportion the costs of arbitration between the parties “in such manner as it
deems reasonable taking into account the circumstances of the case, the conduct
of the parties during the proceeding, and the result of the arbitration.” As
stated above, the arbitrator(s) may take into account tactics by either party
which unreasonably interfered with the expeditious conduct of the
proceeding.
Over
ninety percent of civil lawsuits and a high percentage of business arbitration
proceedings are disposed of before a trial or hearings take place, most by
settlement. Yet often each party is reluctant to propose settlement
negotiations, if only out of concern that the proposal will be seen as a sign
of
weakness. A proposal to that effect by the Tribunal at one or more appropriate
junctures in the proceeding should launch negotiations, without either party’s
bearing the onus of being the proposer.
A
skilled
mediator can play a critical role in brining about agreement between
adversaries, even if bilateral negotiations did not bring them within reach
of
agreement. If the Tribunal believes that mediation may result in a settlement,
the Tribunal is encouraged to urge the parties to engage in such a process
and
to assist in arranging the same. As a rule, arbitration proceedings should
be
suspended while mediation is in progress, at least for a limited
time.
It
may
well be desirable for senior executives to play an active role in a mediation
proceeding. Often, the parties have settlement options that are business
oriented and less onerous than the payment of money. Business executives are
likely to be best able to explore such options.
The
members of the Tribunal will be thoroughly familiar with the case, and an
arbitrator not appointed by either party may well be able to serve as mediator.
However, the parties may hesitate to confide in an arbitrator, and an arbitrator
would be inhibited in making settlement proposals or giving advice to the
parties. As a rule, therefore, it would be preferable for an individual not
an
arbitrator in the case to serve as mediator. The Tribunal can be helpful by
proposing well qualified candidates and by familiarizing the mediator with
the
case.
It
is
assumed that if a settlement does not come about, the terms of any settlement
offers will not be admitted into evidence at the hearings. If the parties enter
into a settlement agreement, they may wish to request the Tribunal to issue
an
award incorporating the settlement terms.
Appendix
A-1
SAMPLE
BUSINESS AGREEMENT DISPUTE RESOLUTION CLAUSE
(Mediation
- Arbitration)
The
parties will attempt in good faith to resolve any controversy or claim arising
out of or relating to this agreement by mediation in accordance with the Center
for Public Resources Model Procedure for Mediation of Business Disputes.
*
If
the
matter has not been resolved pursuant to the aforesaid mediation procedure
within sixty days of the commencement of such procedure (which period may be
extended by mutual agreement), the controversy shall be settled by arbitration
in accordance with the Center for Public Resources Rules for Non-Administered
Arbitration of Business Disputes, by (a sole arbitrator) (three arbitrators,
or
whom each party shall appoint one) (three arbitrators, none of whom shall be
appointed by either party). The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. § 1-16, and judgment upon the award rendered by
the Arbitrator(s) may be entered by any court having jurisdiction thereof.
The
place of arbitration shall be ___________.
_________________________
*
|
The
Center for Public Resources Model Minitrial Procedures may be substituted
for the mediation procedure.
|
Appendix
A-2
SAMPLE
BUSINESS AGREEMENT DISPUTE RESOLUTION CLAUSE
(Two
Step
Negotiation - Mediation - Arbitration)
The
parties will attempt in good faith to resolve any controversy or claim arising
out of or relating to this agreement promptly by negotiations between executives
of the parties.
If
a
controversy or claim should arise, ____________________________ of X Co. and
_________________________ of Y Co., or their respective successors in the
positions they now hold (herein called the “project managers”), will meet at
least once and will attempt to resolve the matter. Either project manager may
request the other to meet within fourteen days, at a mutually agreed time.
If
the
matter has not been resolved within twenty days of their first meeting, the
project managers shall refer the matter to senior executives, who shall have
authority to settle the dispute (herein called “the senior executives”).
Thereupon, the project managers shall promptly prepare and exchange memoranda
stating the issues in dispute and their positions, summarizing the negotiations
which have taken place, and attaching relevant documents. The senior executives
will meet for negotiations within fourteen days of the end of the twenty-day
period referred to above, at a mutually agreed time.
The
first
meeting shall be held at the offices of the project manager receiving the
request to meet. If more than one meeting is held, the meetings shall be held
in
rotation at the offices of X Co. and Y Co.
If
the
matter has not been resolved within thirty days of the meeting of the senior
executives (which period may be extended by mutual agreement), the parties
will
attempt in good faith to resolve the controversy or claim in accordance the
Center for Public Resources Model Procedure for Mediation of Business
Disputes.*
If
the
matter has not been resolved pursuant to the aforesaid mediation procedure
within sixty days of the commencement of such procedure (which period may be
extended by mutual agreement), the controversy shall be settled by arbitration
in accordance with the Center for Public Resources rules for Non-Administered
Arbitration of Business Disputes, by (a sole arbitrator) (three arbitrators,
of
whom each party shall appoint one) (three arbitrators, none of whom shall be
appointed by either party). The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C § 1-16, and judgment upon the award rendered by
the Arbitrator(s) may be entered by any court having jurisdiction thereof.
The
place of arbitration shall be ____________________.
____________________
* The
Center for Public Resources Model Minitrial Procedure may be substituted for
mediation procedures.
Attachment
C
1.1
|
To
provide for the orderly supervision of operations to be carried
out under
this Agreement at MGP sites, there will be a Management Committee
for each
site for which the Utilities agree to incur costs under this Agreement.
Upon the designation of a site as one as to which the Utilities
agree to
incur costs under this Agreement, each Utility shall designate
a
representative to such Management Committee who shall be authorized
to act
for such Utility by which designated, and an alternate representative
who
shall be authorized to act for such Utility in the absence of its
representative. Such designation shall be made by notice given
to the
other Utility, stating the names and addresses of the representative
and
alternate representative designated by such Utility for such Management
Committee for a particular MGP site. Any Utility may change its
representative at any time by giving written notice to the other
Utility.
In addition, any Utility may designate a special representative
for a
particular Management Committee meeting by delivering to the other
Utility’s representative notice of such designation at or before such
meeting. Any special representative shall be authorized to act
for the
Utility by which designated only at such meeting. In any matter
arising
under this Agreement, a representative or alternate or special
representative shall represent only the Utility which appointed
him. Such
representative (or, in his absence the alternate or special
representative) shall have full power and authority to represent
and bind
such Utility in all matters, and all acts done by him or his alternate
or
special representative pursuant to the authority conferred on him
shall be
deemed to be the acts of the Utility which appointed him. The
representative or his alternate or special representative of the
Utility/Coordinator (as defined in Section 2 below) shall be Chairman
at
all meetings of the Management Committee. If neither the representative,
alternate representative, nor a special representative of a Utility
is
able to attend any meeting held pursuant to this Agreement, the
vote of
such Utility on any matter to be considered at such meeting may
be cast by
written notice delivered to the other Utility representative at
or before
the meeting but not thereafter.
|
1.2
|
The
Management Committee may appoint such subcommittees, to be composed
of
representatives of the Utilities as it deems advisable, for the
study of
any problem in connection with operations
hereunder.
|
1.3
|
The
members of the Management Committee shall be fully empowered by
the
Utility which they, respectively, represent to make all determinations
required hereunder to be made by the
Utilities.
|
1.4
|
The
Coordinator/Utility shall prepare and furnish to each Utility
representative and alternate representative a copy of the agenda
and such
supplementary information as may be appropriate for each meeting
of the
Management Committee, together with notice of the date, time and
place of
such meeting, to be received at least fifteen (15) days in advance
of the
date of such meeting. The Coordinator/Utility shall work with the
representatives and alternate representatives to select meeting
dates,
times and places that are acceptable to all representatives and
alternate
representatives. All meetings of the Management Committee shall
be held in
either Chicago or Naperville, Illinois, or at such other place
as is
mutually agreed to by the Utilities. Each representative or alternate
or
special representative shall be entitled to have present at any
meeting
such agents and employees of his principal as he may desire. The
expenses
incurred by a representative, alternates or special representatives
and
agents and employees of any Utility attending a meeting shall be
borne
solely by such Utility.
|
1.5
|
At
all meetings of the Management Committee, only such matters as
may be on
the agenda shall be considered, but at any such meeting, the agenda
may be
amended, by unanimous consent, to include additional matters raised
by any
representative. The Coordinator/Utility may call a meeting of the
Management Committee at any time it shall deem appropriate and
shall do so
upon the request of any Utility by giving each Utility written
notice
thereof (pursuant to Paragraph 1.4) with the agenda reflecting
the matters
requested by the Utility or Utilities requesting the meeting. Written
minutes of each meeting shall be prepared by the Coordinator/Utility
and
copies thereof shall be made available promptly to the Utilities.
Each
representative or alternate shall notify the other representatives
in
writing of its approval or objection to said minutes within fifteen
(15)
days after receipt thereof, and if a representative fails to so
notify the
other representatives, it shall be deemed to have approved said
minutes.
The determinations of the Management Committee made in accordance
with the
voting procedure in Section 1.8 shall be binding on the
Utilities.
|
1.6
|
Any
matter arising under the Agreement may be submitted to the Management
Committee for consideration and to a vote without holding a meeting,
provided that such matter is submitted by notice in writing to
all
Utilities. Within fifteen (15) days after receipt of such notice,
each
Utility shall give to each other Utility notice in writing of its
vote.
Any proposal which thus receives the affirmative vote provided
for in
Section 1.8 shall be deemed to be a proposal decided upon by the
Utilities, and the determination thus made shall be binding upon
them to
the same extent as votes cast at a meeting of the Management Committee.
Coordinator/Utility shall keep a record of the vote open to inspection
by
the Utilities at all reasonable
times.
|
1.7
|
The
Management Committee shall meet at least once each Calendar Year
prior to
August 1 to consider the program of activities and budget for the
relevant
MGP site that is proposed by the Coordinator/Utility for the succeeding
Calendar Year, and such other matters as may be on the agenda;
provided,
however, that any such meeting may be waived by the unanimous consent
of
the Utilities and any matters on the agenda may be submitted to
the
Management Committee as provided in Section 1.6. No program of
activities
or budget may be implemented unless approved unanimously by the
Utilities.
|
1.8
|
Each
Utility shall be entitled to one vote on any matter or proposal
submitted
to the Management Committee in accordance with this Agreement and
all
decisions of the Management Committee must be
unanimous.
|
2.1
|
The
Coordinator/Utility shall facilitate the performance of all operations
conducted by the Utilities under this Agreement for the MGP site.
There
shall be a separate Coordinator/Utility for each
site.
|
2.1.1
|
Any
Coordinator/Utility at any time may resign as Coordinator/Utility
hereunder by giving to the other Utility notice in writing of such
resignation. Such resignation shall be effective one hundred eighty
(180)
days after the date of notice thereof as provided above, or on
the date on
which a successor Coordinator/Utility appointed by the Utilities
as
provided herein shall be ready and able to assume the obligations
of
Coordinator/Utility hereunder, whichever shall first
occur.
|
2.1.2
|
The
Coordinator/Utility may be removed at any time upon ninety (90)
days’
notice by determination of the Management Committee. The Utilities
shall
promptly give to Coordinator/Utility notice in writing of such
removal.
|
2.1.3
|
Removal
or resignation of any Coordinator/Utility shall not in any way
affect its
right, title or interest or obligations under this Agreement. On
the
effective date of removal or resignation, Coordinator/Utility shall
deliver to the successor Coordinator/Utility possession of all
funds,
equipment, materials, appurtenances, books, records, reports, data
and
rights acquired by or in the custody of Coordinator/Utility for
the joint
account of the Utilities and shall make an accounting to the Utilities
for
such items mentioned herein as shall not be so
delivered.
|
2.2
|
In
accordance with agreed programs and budgets and the terms of the
Agreement
and subject to such instructions as may be given from time to time
by the
Management Committee, Coordinator/Utility shall on behalf of the
other
Utility conduct all operations for its applicable site under this
Agreement, and in connection therewith, shall have the following
rights,
duties and obligations; provided, however, that Coordinator/Utility
shall
consult with the other Utilities when it deems
necessary.
|
2.2.1
|
All
such operations shall be conducted by Coordinator/Utility or by
its duly
authorized agents or by such independent contractors as may be
engaged by
it with the approval of the other
Utility.
|
2.2.2
|
Coordinator/Utility,
its agents or contractors, shall secure and furnish all supervision,
labor, services, materials, equipment, permits and rights necessary
or
appropriate to operations hereunder and shall have custody of all
materials and equipment owned by the Utilities pursuant to this
Agreement.
The selection of employees, the number thereof, their hours of
labor and
their compensation shall be determined by Coordinator/Utility,
its agents
or contractors, exclusively. However, only those items which are
designated Shared Costs in Section 2 of the Agreement are
recoverable.
|
2.2.3
|
Coordinator/Utility
shall conduct diligently all operations in accordance with practices
generally followed in remediation operations for manufactured gas
plant
sites and shall perform such operations in an efficient and economical
manner. All operations shall be conducted in compliance with the
terms of
this Agreement and all applicable laws and
regulations.
|
2.2.4
|
Coordinator/Utility
shall proceed with due diligence to secure or cause to be secured
such
permits, easements, and other rights to the use of land as may
be
requisite or appropriate to the conduct of operations and in accordance
with all applicable laws and
regulations.
|
2.2.5
|
Coordinator/Utility
shall permit, upon receipt of request in writing by any Utility,
employees
and representatives of such Utility to have full access to the
area of
operations (for the relevant MGP site) at all reasonable times
and at
their own risk and expense, for the purpose of observing any and
all
operations being conducted for the joint benefit of the Utilities
and
inspecting all materials, equipment and property. Such inspecting
Utility
shall observe all established safety rules and procedures for the
site.
Each Utility, through its representatives, employees or agents
duly
authorized in writing for such purposes, shall be permitted at
reasonable
intervals and during usual business hours to examine and make copies
of
any and all data and interpretations thereof, including but not
limited to
cores, samples, logs and surveys concerning operations conducted
hereunder
at said Utility’s sole cost. Coordinator/Utility shall furnish drafts of
all reports (including, but not limited to plans and proposals)
to the
other Utility and all the Utilities shall have the right to make
comments
prior to the preparation of the final report or any report submitted
to
the government. Coordinator/Utility shall furnish an accurate monthly
report to each Utility’s representative and alternate representative on
the Management Committee showing expenditures at the site.
Coordinator/Utility shall also furnish to any Utility any additional
information pertaining to operations at the site when a special
request
therefor is made; provided, however, that the cost of gathering
and
furnishing any additional information not ordinarily furnished
by
Coordinator/Utility shall be charged to the Utility who requests
the
information.
|
2.2.6
|
Coordinator/Utility
shall use its best efforts to keep the site free from liens, charges
and
encumbrances arising out of the operations
hereunder.
|
2.2.7
|
Coordinator/Utility
shall promptly pay all costs, expenses and taxes other than corporate
income taxes incurred by its operations as Coordinator/Utility
hereunder
and, with such cooperation of the other Utility as may be necessary
or
appropriate, take such action as may at any time be necessary to
protect
the site.
|
2.2.8
|
With
regard to operations for a particular MGP site, Coordinator/Utility
shall
procure and maintain in force for the Utilities any and all insurance
authorized by the Management Committee, without prejudice to each
Utility’s right to provide independently for its own additional insurance
coverage with respect to its interest in the
site.
|
2.2.9
|
Coordinator/Utility
shall keep full and complete records of accounts and of technical
operations hereunder and prepare and furnish to the Management
Committee
and shall furnish, or cause to be furnished, to government agencies
(with
opportunity for comment and input on drafts by the other Utilities)
such
reports, statements, data and information as may be required (by
law or
the Management Committee) from time to time for the operations
conducted
hereunder, except such reports, statements, data and information
to
government agencies as the Utilities may respectively and individually
be
required to prepare and submit.
|
2.2.10
|
Unless
otherwise directed by the Management Committee, notwithstanding
prior
approval of the program of activities and budget set forth in Section
1.7
of this Attachment, Coordinator/Utility shall submit to the other
Utility,
for its review and comments, all contracts which exceed US$50,000.
The other Utility shall have the right of prior approval of any
contract
which exceeds US$50,000 or ten percent of the total amount in the
approved
program of activities and budget set forth in Section 1.7, whichever
is
less.
|
2.2.11
|
Notwithstanding
Section 2.2.10, no contract containing term provisions which exceed
two
years shall be executed prior to review and approval by both
Utilities.
|
2.3
|
Coordinator/Utility
shall undertake to carry out each program of activities adopted
by the
Utilities within the limits of the approved budget therefor.
Coordinator/Utility shall submit for approval to the Utilities
a copy of
Authority for Expenditure (“A.F.E.”), for any expenditure in excess of
US$100,000.00, or its equivalent, for the site. Such approval of
the
A.F.E. shall not be required if the expenditure in question has
been
included in an approved program of activities and budget.
Coordinator/Utility shall not undertake any operations not included
in any
approved program of activities or make any expenditures in excess
of the
approved budget and an approved A.F.E., if required, except as
follows:
|
2.3.1
|
If
necessary to carry out an approved program of activities for a
calendar
year, the Coordinator/Utility is hereby authorized to make, during
such
year, expenditures in excess of the budget adopted therefor, in
an amount
not to exceed ten percent (10%) of such budget. Any such expenditures
in
excess of the budget shall be reported promptly in writing to the
Utilities by Coordinator/Utility.
|
2.3.2
|
In
case of an emergency, Coordinator/Utility may make such immediate
expenditures as it may deem reasonably necessary for the protection
of
life or property, and such expenditures shall be reported promptly
to the
Utilities by Coordinator/Utility.
|
2.4 Any
and
all claims and suits by third parties arising out of operations conducted
hereunder and brought against the Coordinator/Utility or the Utilities, or
any
of them and/or any of their officers, directors, shareholders, employees,
agents
or representatives (collectively, “Utility Representatives”), shall, to the
extent not covered by insurance, be compromised and settled or defended by
Coordinator/Utility; provided, however, that if the claim or suit is brought
against the Utility (and/or its Utility Representatives) that is not the
Coordinator/Utility, that Utility shall compromise and settle or defend the
claim or suit in accordance with this Section 2.4. The Utility that compromises
and settles or defends a claim or suit pursuant to this Section 2.4 is
hereinafter called the “Defending Utility.” Defending Utility shall promptly
seek the advice of the Management Committee and shall comply with any decisions
of said Committee with respect thereto. Each Utility shall have the right
to
participate through its own counsel, at its own expense, in the settlement,
compromise or defense of any claims and suits hereunder; however, all
expenditures incurred by Defending Utility in prosecuting, defending,
compromising, settling or paying any such claims or suits as directed by
decisions of the Management Committee shall be borne by the Utilities and
charged as a Shared Cost. Defending Utility shall have authority to settle
a
suit for property damage or personal injury, brought against the Defending
Utility or the Utilities, or any of them or any Utility Representatives,
without
the approval of the Management Committee, for an amount not to exceed
$50,000.
2.5
|
Neither
Utility nor any Utility Representative shall be liable to the other
Utility for any acts done or omitted to be done including negligence,
in
the performance of operations hereunder including, but not limited
to,
functions as Coordinator/Utility, provided that such acts or omissions
shall not have resulted from the gross negligence or willful misconduct
of
the Utility or its Utility
Representatives.
|
2.6
|
Coordinator/Utility
will maintain on behalf of the Utilities such offices as may be
necessary
or appropriate and approved by the Management
Committee.
|
3.1
|
After
Coordinator/Utility shall have submitted its proposed program of
activities and budget for approval pursuant to Section 1.7 hereof,
the
Management Committee shall, prior to October 20 of each calendar
year,
consider, agree upon and adopt a program of activities and budget
for the
next succeeding calendar year. Upon adopting a program of activities
and
budget as provided herein, the Management Committee shall provisionally
consider but not act upon, adopt or agree to, a program of activities
and
budget for the calendar year next following that for which the
program of
activities and budget shall have been
adopted.
|
3.2
|
Each
proposed budget shall contain a properly itemized estimate of the
cost of
the operations provided for in the respective program of activities
and of
all other expenditures proposed to be made by Coordinator/Utility
for each
relevant site during the calendar year. Each program of activities
and
budget adopted shall be subject to review and revision by the Management
Committee from time to time; provided, however, that no revision
shall be
made which would prejudice commitments previously made by the
Coordinator/Utility within the limits of an existing approved program
of
activities and budget.
|
3.3
|
As
soon as reasonably possible after the adoption of a program of
activities
and budget, Coordinator/Utility shall deliver or send a copy thereof
to
each Utility.
|
4.1
|
All
Shared Costs incurred in the conduct of operations under this Agreement
shall be borne on an interim basis by the Utilities in proportion
to their
respective percentages shown in Section 1 of the Interim Cooperative
Agreement except as otherwise herein provided. Such costs and expenses
shall be determined and settled in accordance with generally accepted
accounting principles (“Accounting Principles”) and Coordinator/Utility
shall keep its records of costs and expenses in accordance with
such
Accounting Principles. In the event of conflict between this Agreement
and
said Accounting Principles the provisions of this Agreement shall
control.
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4.2
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At
least thirty (30) days prior to the beginning of each calendar
quarter,
Coordinator/Utility shall submit to each Utility an estimate of
cash
expenditures to be made per month of operation during such quarter
to
carry out the approved program of activities in accordance with
the budget
approved therefor. Coordinator/Utility may require each Utility
to advance
its share of estimated expenditures to be made each month in accordance
with the terms of the Accounting Principles (such advance not to
be more
than two weeks prior to the start of the
month).
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4.3
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In
the event the other Utility fails to pay any invoice submitted,
or cash
call made by the Coordinator/Utility, or if the Coordinator/Utility
fails
to pay its share of costs and expenses hereunder, such non-paying
Utility
shall be in default. Any non-defaulting Utility shall proportionately
contribute to the payment of the share of costs and expenses which
the
defaulting Utility has failed to pay. Any defaulting Utility shall
thereafter owe and be indebted to each non-defaulting Utility for
the
proportionate contribution made by each such non-defaulting Utility
along
with interest at the rate set out in Section 7 of the
Agreement.
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4.4
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In
addition to the other remedies available to them, each non-defaulting
Utility shall have the option (but only after consultation with
the
defaulting Utility) exercisable by notice in writing within thirty
(30)
days after the expiration of ninety (90) days after a Utility first
goes
into default, to bring a request for a final allocation of costs
within
the meaning of and subject to the limitations of Sections 4, 5
and 6 of
the Agreement for the site or sites in
default.
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4.5
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The
remedies contained in Section 4.1 through 4.4 above against a defaulting
or non-defaulting Utility are not exclusive and are without prejudice
to
any remedies or actions at law or equity that are or may be available
to
any non-defaulting Utility for the enforcement of its rights and
collection of all sums due and owing from any defaulting Utility.
The
failure to exercise any right or remedy at any time shall not constitute
a
waiver of such right or remedy or estop the future exercise of
such right
or remedy with respect to any default or subsequent defaults in
the
performance by any Utility of its obligations hereunder (including
but not
limited to the obligation to advance
funds).
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5.1
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Except
as may be specifically provided in this Agreement, all materials
and
equipment acquired by Coordinator/Utility for operations hereunder
shall
be owned by the Utilities in undivided shares in their proportion
of the
Interim Allocation of Costs, or, if determined, the Final Allocation
of
Costs.
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5.2
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Except
as may be otherwise approved by the Management Committee and subject
to
the provisions of the Agreement, Coordinator/Utility shall purchase
only
such materials and equipment as are reasonably required in the
conduct of
operations provided for in the approved programs of activities
or
revisions thereof. Coordinator/Utility shall not stockpile materials
or
equipment for future use without the approval of the Management
Committee.
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5.3
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Subject
to the provisions of this Agreement, materials or equipment declared
by
Coordinator/Utility to be surplus shall be disposed of in such
manner as
the Management Committee may direct; or if the fair market value
of an
item does not exceed US$10,000.00, Coordinator/Utility, upon giving
to the
Utilities twenty (20) days’ written notice of intention so to do, shall
dispose of said item in such manner as Coordinator/Utility shall
deem
appropriate; provided however, that each Utility may, if practicable,
separately sell and dispose of its interest in such materials or
equipment
or may purchase, at the prevailing market price in the area, materials
or
equipment which Coordinator/Utility has declared to be surplus
and which
Coordinator/Utility intends to dispose of on the open
market.
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5.4
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Upon
termination of this Agreement, Coordinator/Utility shall salvage
for the
joint account all jointly-owned materials and equipment which can
reasonably be salvaged, to be disposed of as provided in Section
5.3
hereof.
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6.1
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The
obligations hereunder of each Utility shall be suspended while
and to the
extent that such Utility is prevented from complying with such
obligations
by force majeure, including, without limitation, strikes, lockouts,
labor
and civil disturbances, acts of God, unavoidable accidents, laws,
rules,
regulations or orders of any government or agent or instrumentality
thereof having at any time de facto or de jure control over any
of the
Utilities, acts of war or conditions arising out of or attributable
to
war, whether declared or undeclared, shortage of essential equipment,
materials or labor, or restrictions thereof or limitations upon
the use
thereof, delays in transportation or communication, adverse weather
conditions or other causes reasonably beyond the control of any
Utility
claiming force majeure hereunder, whether similar or dissimilar
to the
causes herein specified. If force majeure should result in suspension
of
performance of any of the obligations of any utility hereunder,
such
Utility shall give to the other Utility notice in writing of such
suspension of performance as soon as reasonably possible, stating
therein
the date and extent of such suspension and whether in whole or
in part,
and specifying in reasonable detail the nature of the force majeure
causing such suspension. Any Utility, the performance of whose
obligation
has been suspended as aforesaid, shall resume performance thereof
as soon
as reasonably possible after the circumstances preventing such
performance
as provided above shall have terminated or ceased to have such
effect, and
shall so notify the other Utility as herein provided. The provisions
of
this Article shall not suspend the obligation of a Utility to make
timely
payment of its share of costs and expenses hereunder or to provide
access
to the site to the other
Utility.
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