A dispute resolution clause defines the procedure by which the parties intend to resolve all disputes that may arise from their contract. It can include both contractual disputes (for example. B differences of opinion on the meaning and effect of a given contractual clause) and non-contractual disputes (. B, for example, if Part A was negligent in the performance of the contract). There are different methods of dispute resolution, one or more of which can be defined in a dispute resolution clause. Dispute resolution is an important condition of international trade, including negotiations, mediation, arbitration and litigation.  [Full Quote Necessary] Parties who jointly take on a new business venture are often positive about their relationships and focus on the fact that it works in their mutual interest. It is clear that they may be hesitant to spend a lot of time planning what should happen if things get angry later. However, it is essential to think ahead of the dispute settlement clauses in your contract to ensure that there is an appropriate procedure for dealing with differences of opinion in a structured and proportionate manner that give the parties the best chance of resolving them as quickly and cheaply as possible. In this article, we examine some of the most important considerations in the development of an effective dispute resolution clause.
Escalation clauses are multi-stage dispute resolution clauses that provide for an escalation of a dispute, usually through relatively informal discussions between the parties, through more formal processes, until the dispute is definitively resolved in one way or another. Risks can be minimized by reflecting on the dispute resolution strategy at the transaction stage. In particular, think carefully about where you need to hear all the quarrels that go to the heart of the transaction. This choice should then be included in the main contracts, which will help to ensure that disputes that may fall under several of the treaties are heard in this forum. Alternatively, especially when an arbitration procedure is applied, you should consider the development of a framework agreement specifying where the disputes that lead to the core of the transaction should be heard. There is much more latitude for the parties to adapt the proceedings to the needs of a particular litigation in arbitration proceedings than in the courts. In arbitration proceedings, parties are generally free to agree on appropriate proceedings, hold hearings in a neutral country, and appoint arbitrators who are of a nationality other than the parties. Arbitrators may also be empowered to decide a dispute under other material rules and/or other rules that a court is required to follow.