What the clause decides
A dispute resolution agreement can be a clause inside a larger contract or a separate agreement signed after a dispute has arisen. Either way it typically settles whether disputes go to court or to arbitration, which law governs, and where proceedings will take place. Many add a tiered process, requiring talks between executives and then mediation before arbitration or litigation may begin. Others include a jury waiver, a waiver of class or collective claims, provisions on interim relief, or rules on who bears costs. Each choice involves trade-offs, and a clause copied from an unrelated deal may not fit the relationship you actually have.
Drafting gaps that cause disputes about the dispute
Some of the most expensive fights concern the clause itself. An arbitration clause that names an institution that does not exist, or documents that point to two different forums, can trigger litigation about where the case belongs before anyone reaches the merits. Tiered clauses with vague steps can leave a party unsure whether it may file yet, and a court may pause or dismiss a case brought before a required step was completed. Related contracts with conflicting clauses, such as a master agreement and separate purchase orders, are another frequent source of trouble. Keep the signed versions of every related agreement together, since the dispute may turn on which one controls.
Choosing terms with you
When we help draft or negotiate a dispute resolution agreement, we start by asking what kinds of disputes you expect, where the counterparty and its assets are, and how much privacy and speed matter to you compared with the ability to appeal. For cross-border relationships, enforcement usually drives the choice between courts and arbitration. For an agreement made after a dispute has begun, we look at whether a different process would serve both sides better than the one the contract already provides, and whether a tolling agreement should accompany it. We also read the clause against the rest of the contract so that the governing law, the notice provisions, and the forum fit together.
