Unilateral option clauses—an introduction
Produced in partnership with Latham & Watkins

The following Arbitration practice note produced in partnership with Latham & Watkins provides comprehensive and up to date legal information covering:

  • Unilateral option clauses—an introduction
  • Unilateral option clauses defined
  • Why provide a unilateral option to arbitrate or litigate?
  • Enforcing unilateral option clauses
  • Legal pitfalls—certainty
  • Legal pitfalls—mutuality
  • Legal pitfalls—unconscionability
  • A review of selected jurisdictions
  • Drafting pitfalls
  • Practical steps

Unilateral option clauses—an introduction

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, and vice versa, but the decision may not be clear at the time the clause is drafted. An option clause allows the party or parties in whose favour the option is granted to delay the choice until after the dispute has arisen and the relevant factors have become

Popular documents