A ‘pre-nup’ for your commercial contract – dispute resolution clauses
In the heat of agreeing a contract which promises all things positive, few want to think about what will happen if it goes wrong. Hopefully nothing will but if you do need a ‘divorce’, how and where that divorce or dispute is dealt with can make a huge difference.
Dispute resolution clauses are often buried at the end of the agreement and are rarely negotiated. But they can be the difference between being able to enforce your rights or not.
What do they cover?
• Where the dispute will be decided – which country’s courts have the right to decide the dispute. Remember if you are dealing with a Scottish or Northern Irish business, those countries have different courts and laws to England and Wales.
• How the dispute will be decided – which country’s laws will apply and will the dispute go to court or arbitration. This matters as it affects how a decision can be enforced amongst other factors.
If your business is based in England, it is usual to provide that the English courts to have exclusive jurisdiction and for English law to apply.
Arbitration or litigation?
These are the 2 most common methods – neither prevent the parties from trying to resolve the dispute first and indeed this is encouraged.
It is vital that the dispute resolution clause is clear. If you want arbitration and never want to go to court, the clause must clearly say so. If there is any ambiguity, you may face a dispute about how the actual dispute should be determined!
If you are concerned about the wording of any of your existing agreements or need to speak to someone about one you may soon be signing, our experts will be happy to help. Please call us on 0161 926 9969.