Dispute resolution clauses—what and why

The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:

  • Dispute resolution clauses—what and why
  • What is a dispute resolution clause?
  • Why include a dispute resolution clause?
  • Disadvantages of dispute resolution clauses
  • Do dispute resolution clauses work?
  • Which dispute resolution clause to choose?
  • No dispute resolution clause
  • Dispute arises—what happens next?
  • Impact on limitation defence
  • Applicable law and jurisdiction provisions

Dispute resolution clauses—what and why

What is a dispute resolution clause?

Many commercial agreements contain what may be called a ‘dispute resolution clause’ or an ‘ADR clause’ (ie an alternative dispute resolution clause).

Throughout this Practice Note the term ‘dispute resolution clause’ is used. This is partly because, although a dispute resolution clause often includes provision for ADR procedure(s) to be followed, this is not strictly a necessity. Rather, it is possible to include in the agreement a dispute resolution clause which simply makes provision for litigation through the courts as the response to any dispute. Note: irrespective of whether or not the agreement is to include a specific dispute resolution clause, it is always critical to consider issues of applicable law (governing law) and jurisdiction in respect of the agreement (see: Applicable law and jurisdiction provisions below).

For guidance on a ‘litigation-only’ dispute resolution clause, see Practice Note: Types of dispute resolution clauses—litigation, mediation, multi-tier, hybrid and carve-out clauses—Litigation clause.

Note, however, that keeping silent with regard to ADR in the agreement does not mean that the parties are not required to consider ADR once a dispute arises. The pre-action and post-issue requirements to litigating in this jurisdiction require that parties give meaningful thought to seeking to resolve their dispute by means other than through the courts. See Practice Notes:

  1. Pre-action behaviour in non-protocol cases—Practice Direction Pre-Action Conduct

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