Keeping collaborations on track: dispute resolution boards for life sciences and technology companies

Traditional litigation is often a poor fit for resolving these issues. Court proceedings can be slow, costly, and public, and pursuing them can make it less likely that the parties reach a mutually beneficial outcome. Life sciences and technology companies may also wish to avoid developing a litigious reputation that could deter future collaborators. The question, then, is whether there is a more effective way to manage disputes without sacrificing the underlying commercial relationship.

What is a Dispute Resolution Board?

A Dispute Resolution Board (DRB) is a standing panel, typically comprised of one to three members, established by the parties through a clause in their contract. The parties appoint DRB members at the outset of the contractual relationship. Typically, DRB candidates include individuals with industry-specific expertise or who are already familiar with the partnership, like the expert who reviewed confidential information during the pre-contract stage. The parties may also draw from rosters maintained by institutions such as the International Centre for Dispute Resolution (ICDR) or World Intellectual Property Organization (WIPO).

A key advantage of DRBs is that they remain informed about the parties’ collaboration throughout the life of the agreement, typically through periodic updates or meetings. When a dispute arises, this knowledge means the board requires less time to get up to speed, enabling faster and more informed decision-making. 

Why consider a DRB?

DRBs offer several benefits that are particularly well-suited to the life sciences and technology sectors. Their short and flexible procedures allow disputes to be resolved in a matter of months or even less, which is critical when disagreements threaten to create roadblocks in an ongoing working relationship. Hearings are informal, the role of counsel is generally limited, and evidentiary rules are flexible. Because DRBs are a form of alternative dispute resolution, they also offer confidentiality, reduced costs, and a broader range of outcomes oriented toward the parties’ business interests rather than solely legal norms.

Importantly, the parties retain control over the process. They may agree in their contract whether the DRB’s determinations are binding or non-binding, and they may preserve the right to escalate unresolved matters to arbitration. Where a DRB issues recommendations rather than binding decisions, its output can nonetheless serve as a powerful tool for narrowing issues and facilitating settlement. 

Practical considerations

DRBs are created by contract, so parties who wish to use one must include the relevant provisions in their agreement from the outset. Both the ICDR and WIPO offer model contract clauses that can be adapted to the parties’ needs.¹

For companies engaged in cross-border collaborations, incorporating a DRB clause at the contracting stage is a practical step toward protecting both the partnership and the business objectives it was designed to achieve.

Footnotes

¹ WIPO Model Dispute Resolution Board (DRB) Clause; ICDR Model Three-Member DRB Clause; ICDR Model Single-Member DRB Clause.