Dispute Resolution Clause in UK Contracts: What It Means & Example Wording

When to Include a Dispute Resolution Clause

• In every commercial contract to provide a structured process for resolving disagreements before they escalate
• In long-term contracts and joint ventures where the parties have an ongoing relationship they want to preserve
• In international contracts where arbitration may be preferable to litigation in a foreign court

Example Wording

This example wording is illustrative only. Customise it to your specific circumstances and consider seeking legal advice.

Is a Dispute Resolution Clause Enforceable in the UK?

UK courts generally enforce dispute resolution clauses, including agreements to mediate and arbitrate. The Arbitration Act 1996 gives strong statutory support to arbitration agreements and limits the grounds on which courts can intervene. Mediation clauses are enforceable as agreements to mediate, and courts may stay proceedings and penalise a party in costs for failing to engage in agreed ADR processes. The Court of Appeal in DGT Steel and Cladding Ltd v Cubitt Building & Interiors Ltd [2007] confirmed that courts will enforce 'negotiate in good faith' obligations if sufficiently certain.

Common Mistakes

• Drafting a dispute resolution clause that is too vague — stating 'the parties will try to resolve disputes amicably' is unlikely to be enforceable because it lacks a defined process and time frame
• Failing to preserve the right to seek urgent injunctive relief — a multi-tiered process should not prevent a party from going to court for an interim injunction when time is critical
• Not specifying the arbitral institution, seat, language, and number of arbitrators in an arbitration clause — an incomplete arbitration clause can be difficult to enforce