Have you checked your model dispute resolution clause lately?
Recommended model clauses are included at the end of this page. You can also download a pdf of our Model Clauses Guide here.
When was the last time you checked your model dispute resolution clauses that you include in your contracts or services agreements? Almost all private dispute resolution processes require the agreement of the parties to engage in the process. Almost always the dispute resolution clauses included in contracts and agreements for services are old, outdated and, in many cases, ineffective and unenforceable. Such clauses are typically added to contracts/agreements at the 11th hour when everything else has been scrutinised, debated, and agreed.
Dispute resolution clauses are usually not seen as particularly contentious or important. At a time of heightened interest and excitement about the subject matter of such contracts, there is often little appetite to talk about something that might be perceived as negative, or indeed threatening towards the relationship. Often the hope or presumption is that it is something that is included in a contract but will never be needed. Unfortunately, our experience tells us that conflict is an almost inevitable consequence of many commercial transactions/business relationships.
Parties already in dispute are highly unlikely to agree on anything, let alone to refer their dispute to a particular dispute resolution process/service. This is what makes good model clauses critical to enabling the prompt, proportionate and cost-effective resolution of disputes, should they arise in the future.
What makes for a good model clause? One that can be effectively and efficiently relied on to enable a dispute to be resolved promptly by whatever process is agreed. Model clauses need to be clear and certain in terms of both the process and the means of securing the appointment of the relevant third party neutral (for example, arbitrator, mediator, expert). Simply referring disputes arising to mediation or arbitration is ineffective and inefficient. Parties routinely spend significant time (and money) arguing over what the process should look like, who to appoint to be the mediator or arbitrator and procedural and timetabling matters. This can all be easily avoided by careful drafting of dispute resolution clauses.