Mediation/Condition Precedent: International Lawyers Also Worry About Consequence Of Skipping Mandatory Pre-Arbitral Step

It’s Not Exactly The Same As Skipping Mediation In A Home Sale Purchase In California . . . .

     California courts have established that the consequence of not requesting mediation before suing for breach of a California Association of Realtor’s residential purchase agreement is that the plaintiff will not recover attorney’s fees even if the plaintiff prevails.  That result is the logical consequence of the contractual language in the C.A.R. purchase agreement.  See generally our sidebar category:  Mediation:  Condition Precedent.  Interestingly, practitioners of international construction law must also grapple with the consequences of skipping an ADR step.

     Matthias Scherer and Samuel Moss, attorneys with the international law firm Lalive, have authored a November 28, 2016 article entitled, “The consequence of skipping a mandatory pre-arbitral step.”  The article focuses on a recent ruling by the Swiss Federal Supreme Court considering the consequences of failing to comply with a mandatory pre-arbitral condition – in this case, a conciliation step.  The authors list potential consequences:  (1) dismiss the case for lack of jurisdiction or inadmissibility; (2) suspend the proceedings; or, (3) award damages for breach and proceed with the arbitration.

     Here, the court characterized the issue as one of lack of jurisdiction, resulting in suspension of the proceeding by the arbitral tribunal until the parties complied with the pre-arbitral condition.