Overview

‘Appropriate dispute resolution’ is the mantra when drafting dispute resolution clauses. Such clauses should never be boilerplate. They should always be drafted to take into account the nature of the parties' relationship, the subject matter of the contract, the place of performance of the contract and any other considerations material to the parties' needs.

There is no "one size fits all" approach to dispute resolution. Before drafting or agreeing a clause, consider the following broad features of the main dispute resolution methods and the situations in which they may be appropriate. There are many forms of dispute resolution to consider, including civil litigation in the national courts, international arbitration, binding expert determination, adjudication, mediation, conciliation and other forms of non-binding dispute resolution.

It is critical that a dispute resolution mechanism results in a binding and enforceable decision without unnecessary delay or expense. There is no point in having a mechanism which results in a decision which one of the parties cannot enforce. Equally, a party does not want to have to spend years and significant legal costs to obtain a decision which could have been obtained quicker and cheaper through another mechanism.

However, the broad principles can be outweighed by particular needs or special circumstances of the parties. Is privacy and confidentiality important? If so, the public nature of High Court litigation may not be appropriate. Does the law impose a dispute resolution method (such as in the UK where the Housing Grants Construction and Regeneration Act 1996 imposes adjudication in construction contracts)?

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