Risky Business | Series 2, Episode 2 | Commercial contracts – pitfalls reminders – Dispute resolution clauses

Dispute resolution clauses are sometimes regarded as “midnight clauses" on which parties spend little time when negotiating a commercial contract. However they could have a significant impact on the parties should the deal go wrong.

When drafting a dispute resolution clause, it is important to first decide the appropriate dispute resolution mechanism, remembering that mediation, litigation or arbitration each have their own pros and cons. If arbitration is selected, then parties might choose ad hoc or institutional arbitration. There are various points to consider when selecting the most appropriate institutional arbitration rules, and parties are recommended to carefully consider the seat, governing law, hearing place and language of arbitration, and the number of arbitrators, in their arbitration clause. As a rule of thumb, remember to keep the dispute resolution clause simple and get the basics right.