A recent High Court decision serves as a reminder that multi-tiered dispute resolution clauses are not necessarily enforceable, and provides insight into key drafting points.
Overview -
Multi-tiered dispute resolution (or multi-tiered jurisdiction) clauses are commonly found in commercial contracts. Such clauses provide for alternative forms of dispute resolution (for example, mediation or negotiations by senior management) prior to the commencement of a formal claim and thus seek to avoid the time and expense of litigation/arbitration. However, as Emirates Trading Agency LLC v Sociedade de Formento Industrial Private Ltd recently illustrated, such clauses must be drafted carefully to ensure that they are enforceable.
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