Dispute Resolution Clauses In Agreement – Drafting Principles And Concepts

INTRODUCTION

It is a fundamental principle that parties are bound by the terms of their agreement. The Courts are keen on upholding terms agreed by the parties including the terms of dispute resolution. Therefore in creating a watertight agreement, drafters and parties alike are required to draft clear, complete and consistent dispute resolution clauses that are preemptive of all possible scenarios. It is important to construct the clauses with simple and clear language and to avoid the use of unnecessary legal jargons. The need for clarity is to prevent the parties from being subject or bound to a term they had not intended.¹

The use of dispute resolution clauses in a contract is distinct from governing law clause or jurisdiction clause. The jurisdiction clause operates where the parties intend to submit their dispute to a competent court through litigation. The governing law clause primarily refers to the substantive law regulating the performance of the