4 Elements to Improve Enforceability of a Multi-tiered Dispute Resolution Clause


The English High Court decision in Emirates Trading Agency LLC v Prime Mineral Exports Private Limited offers guidance.

Why this case is important -

Multi-tiered or dispute escalation clauses are an important means by which commercial parties try resolve disputes amicably and avoid the time and expense of formal litigation or arbitration. Typically these clauses set out a mechanism which requires the parties to engage in negotiation and/or mediation prior to the commencement of litigation or arbitration. Fulfilment of the contractual requirements is generally a condition precedent to commencing litigation or arbitration. However, recent case law, which largely analysed poorly drafted clauses, cast doubt on the enforceability of such provisions. That case law meant that if key elements of the negotiation or mediation procedures are uncertain, including the requirement to negotiate on a friendly basis and in good faith, the English courts might find the clause to be unenforceable, creating doubt as to whether conditions precedents to formal proceedings existed and, if so, whether they were satisfied.

The recent decision in the High Court (Emirates Trading Agency LLC v Prime Mineral Exports Private Limited [2014] EWHC 2104 (Comm)) has provided much needed guidance on the enforceability of such clauses. In this case, the court upheld an agreement to resolve the dispute or claim by “friendly discussion” when no resolution was arrived at within a defined period of time. Subject to terms that create sufficient contractual certainty, enforcement of such an agreement is not only consistent with giving the parties what they bargained for, but is also in the public interest.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Latham & Watkins LLP | Attorney Advertising

Written by:


Latham & Watkins LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.