Dispute resolution clauses in contracts

In contracts, it is important to have a provision in place to provide dispute resolution clauses. These are enshrined in contracts to lay out how disputes should be resolved.

Here, we examine the purpose of a dispute resolution clause and why it is important to get this right. We also review what should be included in a dispute resolution clause, the different methods of dispute resolution, and how Giambrone & Partners can help you with this.

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The importance of including a dispute resolution clause in a contract.

Why it is vital to include the correct information in a dispute resolution clause.

Guide to what should be included in a dispute resolution clause.

The different methods of dispute resolution and the key benefits.

Find out how Giambrone & Partners can help you by drafting a dispute resolution clause

We answer common queries on dispute resolution clauses in contracts.

Why should you include a dispute resolution clause in a contract?

If you are entering into a commercial enterprise with another party, it is important to think about the consequences in the event of a dispute. A dispute resolution clause is written into your contract so that you have certainty as to the jurisdiction in which a dispute is dealt with. This prevents the other party from bringing a case in a jurisdiction that may be less favourable. 

The clause will cover contractual disputes.         read some examples of contractual disputes here.

The clause may also cover non-contractual disputes, which are disagreements based on actions not attached to contract clauses. For example, this may include negligence.

An alternative dispute resolution (ADR) clause allows the contracting parties to agree that if a dispute arises, they will use an alternative form of dispute resolution,for example, mediation or arbitration initially in an attempt to resolve the dispute without recourse to a court. Using alternative dispute resolution before considering litigation can help to save money and be time-saving.

If a dispute reach the stage where litigation is considered,  a jurisdiction clause means that all parties have agreed to be subject to the designated jurisdiction named in the contract. This means that all parties are aware of the jurisdiction where any disputes will be dealt with.

Non-exclusive jurisdiction clauses occur when all parties are in agreement with the jurisdiction named in the contract but without prejudice to the right of one or other of the parties to refer the dispute to the courts of another jurisdiction. This provides more flexibility and means that you are not tied to a particular jurisdiction.

Unilateral jurisdiction, also known as one-sided jurisdiction, is common in agreements related to finance. It means that one party can bring proceedings to a particular court in a jurisdiction, while the second party can bring the dispute proceedings to any appropriate court.

Are you dealing with a contractual dispute with another party? Contact us today for assistance.

Why is it important to get this right?

A dispute can have a negative impact on any business. This can, in extreme circumstances, the ramifications can stall its business activities. Having a clear and thorough dispute resolution clause can make resolving matters easier and faster, allowing businesses to save time and money and avoid a long, drawn-out litigation process and help to maintain confidentiality.

What should you include in a dispute resolution clause?

A dispute resolution clause should detail all the aspects of a dispute and how it should be resolved. For example including the fact that ADR should be attempted in the first instance. It should also cover how an agreed resolution will be enforced, and how any costs which may be incurred will be apportioned.

The chosen jurisdiction should be incorporated into the clause - this can provide a clear pathway for both parties. Finally, you must ensure that issues of privacy and confidentiality are covered, to ensure that both parties are protected.

Are you unsure what to include in your dispute resolution clause? Contact Giambrone & Partners today for assistance.

The different methods of dispute resolution

The first step in a dispute resolution procedure is often mediation - providing it is suitable for the nature of the dispute. Mediation is when both parties discuss their dispute in the presence of a non-partisan trained mediator, who can help maintain a civil and productive discussion and come to a conclusion which benefits both parties. This decision is not legally binding. This is often the quickest, and in many cases, most inexpensive option, and can allow both parties to maintain a professional relationship.  

Find out more about the benefits of using mediation here.

If mediation is not suitable or does not work, then arbitration proceedings may be necessary. Arbitration is similar to mediation, but the arbitrator has the power to come to a legally binding conclusion on your behalf. Arbitration is a good choice if you are struggling to reach a decision that benefits both parties; however, you may not always agree with the arbitrator’s decision.

If arbitration does not work, then litigation may be necessary. This will involve going to court and having your dispute heard by a judge. The final decision will be made by the judge and will be legally binding. You will not have a say in the final decision, and the dispute may not be resolved in your favour.

Find out more about how Giambrone & Partners can assist you in preventing contractual disputes here.

The benefits of alternative dispute resolution

Alternative dispute resolution is often preferable to proceeding directly to litigation as it is informal and may allow you to have a more balanced and reasonable discussion, and keep your professional relationship intact.  ADR also can help you to save time and money, as well as stress.

Find out more about alternative dispute resolution here.

How can Giambrone & Partners help?

When drafting a dispute resolution clause, it is important to ensure that all the essential elements are covered. Giambrone & Partners is highly  experienced in drafting a dispute resolution clauses and resolving a disputes  Giambrone & Partners prioritises ADR where possible, before considering taking your case to court.

Get in touch to see how Giambrone & Partners can help you.

Common queries

Why include a dispute resolution clause in a commercial contract?

A dispute resolution clause can help you to resolve disputes more easily than if no clause is in place, setting out a roadmap you will follow when disputes occur. It can prevent issues from escalating.

Which arbitration rules should be used?

An arbitration clause should be included in your dispute resolution, laying out that in the event of a dispute, both parties agree to proceed to arbitration rather than litigation as a first step.

Does a dispute resolution clause survive termination?

The dispute resolution clause, including an arbitration clause, can survive termination.

What happens if there is no dispute resolution clause?

In the case of no dispute resolution clause being present in a contract, then local contract laws must be followed to achieve a resolution.

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