Unilateral Option clauses defined

Unilateral option clauses are Dispute resolution clauses in agreements that grant one party or a group of parties (but not all the parties) the right to elect between arbitration or litigation to resolve a dispute. These clauses also are called one-sided, non-mutual, asymmetrical, or sole option clauses. A unilateral option clause provides flexibility to select the dispute resolution method most appropriate to the case at hand. They are commonly used in finance contracts, where a lender wishes to retain flexibility to recover a debt and otherwise enforce its rights against a buyer who breaches its obligations.

Unilateral option clauses are a type of hybrid dispute resolution clause—see Practice Note: Types of dispute resolution clauses—litigation, mediation, multi-tier, hybrid and carve-out clauses for more information.

Note: judgments from non-UK jurisdictions referred to in this Practice Note are not reported by LexisNexis® UK.

Why provide a unilateral option to arbitrate or litigate?

There are a number of reasons a party, such as a lender, may choose arbitration over litigation as the preferred means of dispute resolution,