Applicable dispute resolution clauses - overviewApplicable dispute resolution clauses

If the claim that is the subject of the dispute concerns a contract, check whether or not that contract contains an arbitration and/or a mediation clause. If a contract contains a valid arbitration clause then the dispute must be referred to arbitration, not the court. If court proceedings are brought in breach of an arbitration clause, the court is required to stay the litigation. Mediation clauses must also be complied with, providing they are sufficiently certain. A failure to do so may result in an adverse costs order. If there is a mediation clause and the parties have not adhered to it, the court is likely to stay any proceedings so that the parties can comply with their contractual obligations.

Dispute resolution clauses – initial considerations

When contracts are drafted they should always contain a dispute resolution clause to assist the parties in the event that a dispute arises. A party considering commencing proceedings to resolve a contractual dispute, or who is notified of the potential of such proceedings, must always check to see if there is a dispute resolution clause in the contract and, if so, its provisions. Issues to consider include: whether the clause covers the dispute in question, what the governing law of the dispute will be, whose courts (if indeed it is a court) will have jurisdiction over the dispute and whether there are any limitation issues to be considered.

For more detail see Dispute resolution clauses - initial considerations.

Types of dispute resolution clauses

There are an array of different types of dispute resolution clauses, providing for various mechanisms by which parties' disputes can be resolved. The most common form of dispute resolution clauses are:

It is important, before a dispute is raised or responded to, that practitioners appreciate the meaning and effect of the dispute resolution clause contained in the relevant contract as that clause will determine the procedure and timetable for the dispute. Practitioners also need to be aware of the consequences of a failure to comply with the clause set out in the contract.

For more detail see: