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Law and disputes

Dispute resolution clause: meaning and sample wording

A dispute resolution clause sets out the steps the parties must take when they disagree: usually negotiation between senior people first, then mediation, then arbitration or court.

When to use it

Useful in long-term commercial relationships, international contracts, and anywhere confidentiality or speed matters more than a public court judgment.

Sample dispute resolution clause

If any dispute arises out of or in connection with this Agreement, either party may give the other written notice of the dispute. Senior representatives of each party with authority to settle the dispute shall meet within fourteen (14) days of the notice and attempt in good faith to resolve it.

If the dispute is not resolved within thirty (30) days of the notice, it shall be referred to and finally resolved by arbitration under the rules of [the named arbitral institution] by a sole arbitrator. The seat of the arbitration shall be [city], and the language of the arbitration shall be English.

Nothing in this clause prevents either party from seeking urgent interim or injunctive relief from any court of competent jurisdiction.

What to check

  • Deadlines for each stepEscalation and mediation steps need time limits, or a party can delay proceedings indefinitely.
  • Arbitration essentialsName the rules, the seat, the number of arbitrators and the language. Missing any of them invites a dispute about the dispute clause.
  • Court or arbitrationArbitration is private and its awards are enforceable in over 170 countries under the New York Convention, but it can be expensive for small claims. Courts are public, can be cheaper and allow appeals.
  • Urgent reliefAlways keep the right to go to court for an injunction, for example to stop a confidentiality breach.

Make the variable parts fill themselves in

In a Word template, replace the details that change with {tags} and wrap optional wording in a section. Clausery turns them into questions, so each document only includes the parts that apply:

If the dispute is not resolved within {negotiation_days} days, {#include_arbitration}it shall be finally resolved by arbitration under the {arbitration_rules}, seated in {arbitration_seat}{/include_arbitration}{^include_arbitration}either party may bring proceedings in the courts of {jurisdiction}{/include_arbitration}.

Paste this into your own template, then check it with the free template tag checker or read the template syntax.

Questions

Should I choose arbitration or court?

Arbitration suits international contracts, confidential disputes and technical subject matter. Courts often suit domestic contracts and smaller claims. Consumer and employment arbitration is restricted in many places.

What is a tiered dispute resolution clause?

One with escalating steps, such as negotiation, then mediation, then arbitration or litigation. Courts in several countries will enforce the earlier steps if they are clearly defined.

Can I use this sample wording as it is?

It is a general starting point. Contract law differs between countries and states, and the right wording depends on the deal, so have it reviewed before you rely on it.

Free templates that use it

Related clauses

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This page is general information, not legal advice. Laws differ between countries and states; have wording reviewed for your situation before you rely on it.