Guarantee of compliance in alternative dispute resolution: what is it?

In alternative dispute resolution (such as arbitration or binding advice), it is important that the outcome is actually complied with. A compliance guarantee—or the proper form of dispute resolution—ensures that a decision is enforceable, just like a court judgment.

A ruling must be complied with

If a judge issues a ruling, it must be accepted; one may appeal, but ultimately the judge has the final say. If someone fails to comply with the ruling, the winning party can enforce it through a bailiff, because a judgment is an enforceable title.

And what about alternative dispute resolution?

If you choose an alternative to the courts, enforceability varies depending on the form. An arbitral award can be executed just like an ordinary judgment, subject to permission from the court (exequatur). The situation is different with binding advice: it is essentially a settlement agreement, which you must first enforce through the courts in the event of non-compliance.

What is a performance guarantee?

To ensure that the outcome of alternative dispute resolution is actually complied with, you can reinforce this—for example, by agreeing in advance that the parties bind themselves to the outcome and implement it immediately, possibly with a penalty or security for non-compliance. This prevents you from having to litigate after the procedure to prove your case.

Choose the right shape and secure it properly

If you desire speed and confidentiality with immediate enforceability, arbitration may be more suitable than binding advice. Clearly define the chosen form and enforceability in your contract or dispute resolution mechanism so that the outcome is truly valuable.

Frequently Asked Questions

Is an arbitral award enforceable?

Yes, after leave from the judge (exequatur), it can be executed just like an ordinary judgment.

How do I enforce a binding opinion?

Binding advice is essentially a settlement agreement; in the event of non-compliance, you must still enforce it through the courts.

How do I ensure that an outcome is adhered to?

Choose the appropriate form and stipulate in advance that the parties bind themselves and perform, possibly with a penalty or security for non-performance.

Drafting a strong dispute resolution mechanism?

Our legal experts incorporate an enforceable dispute resolution clause into your terms and conditions or contracts. View our litigationteam or schedule a free consultation.