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Dispute Resolution Clauses In Commercial Contracts

I don’t mean to argue against the undeniable wisdom of inserting a dispute resolution clause in a commercial contract at the drafting stage.

Goodness knows, I spent enough time up on the 20th floor of my old law firm trying to persuade my commercial partners to include my own well crafted D/R clause in their boilerplate.

I mean, what’s not to like… it makes absolute sense to agree a dispute resolution framework before a dispute arises.

But there is a BUT.

Most clauses, and there are hundreds of versions, are drafted on the premise that the dispute should get to mediation sooner rather than later. Definitely before any arbitration/court proceedings are started.

Some are multi layered; 1) first negotiate, 2) move on to mediate, 3) then arbitrate or litigate as a last resort.

Many have strict time frames, often measured in days, so one side can force the selection of a mediator and convene the mediation within a nano second of the dispute occurring.

But, these clauses are pushing people through the doors of the mediation room too soon… before the dispute is mature, before the raw edges have been knocked off.

They come to the table without adequately defining to themselves, and each other, what the dispute is all about – upon what it is they agree and disagree, without adequate document exchange and to be honest without adequately spending time wallowing in the conflict and all that it brings with it.

The realities of the dispute, that only come with age – the stress, the cost, the creeping doubt – are missing.

Like a ripe cheese, these things take time.


For more see
The Layered Dispute Resolution Clause – from Boilerplate to Business Opportunity by my good friend Robert Dobbins from Laguna Beach, California

                        author

Geoff Sharp

Geoff Sharp is a Commercial Mediator from Wellington, New Zealand. Geoff works in the Asia Pacific region, including New Zealand, Malaysia, Thailand and Pacific Islands. He is a mediator resolving business problems. He is a fellow of the International Academy of Mediators and mediates complex and hotly debated litigation covering… MORE >

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