Practical Approach To Multi-Tiered Dispute Resolution Clause In India

INTRODUCTION

The evolution of the legal ecosystem in India has bolstered the parties' ability to choose how disputes should be settled if any arise at the time of drafting an agreement. Though the parties have traditional courts as an option, resolving conflicts via Alternative Dispute Resolution mechanisms ('ADR') has become the new norm. Today, some Parties tend to insert what is referred to as a 'multi-tiered dispute resolution clause' ('MTDR clause') in their agreement.

The crux of such a clause is to offer parties the chance to settle their disputes outside of court or arbitration. The clauses state, step-by-step, the procedure that the parties stow to resolve a dispute. They usually contain different phases, each one independent from the other, such as negotiation, mediation or conciliation. Failing these phases, Courts or Arbitration is generally the last resort.