Dispute Resolution Clause template clause

    Updated: 23 March 2026

    Please note: these example clauses are intended as a starting point, not as legal advice. Always adapt the text to your specific situation and have important contracts reviewed by a legal professional.

    Clause text

    Article [X] - Dispute Resolution

    1. Any dispute arising out of or in connection with this Agreement, including any dispute regarding its existence or validity, shall in the first instance be referred to the Parties' designated senior representatives for resolution through good-faith negotiation.

    2. If the Parties are unable to resolve the dispute within [e.g. 20 Business Days] of a Party's written notice of the dispute, the Parties shall submit the dispute to mediation in accordance with the mediation rules of [e.g. CEDR / ICC / a named mediation body]. The costs of the mediation shall be shared equally.

    3. If mediation does not resolve the dispute within [e.g. 30 Business Days] of its commencement, or if a Party refuses to participate in the mediation, the dispute shall be finally resolved by:
    [Option A: the courts of [jurisdiction], and the Parties irrevocably submit to the exclusive jurisdiction of those courts. This Agreement shall be governed by and construed in accordance with the laws of [jurisdiction].]
    [Option B: arbitration administered by [e.g. the LCIA / ICC / a named arbitral institution] under its then-current rules. The tribunal shall consist of [one / three] arbitrator(s). The seat of arbitration shall be [city]. The language of the arbitration shall be [English].]

    4. A dispute is deemed to exist for the purposes of this Article when a Party so declares in writing to the other Party.

    5. The existence of a dispute shall not relieve either Party of its other obligations under this Agreement, unless performance cannot reasonably be required in light of the dispute.

    6. Nothing in this Article shall prevent either Party from seeking interim or injunctive relief from a court of competent jurisdiction in cases of urgency.

    What does this clause mean?

    A dispute resolution clause establishes the steps parties must follow when they cannot agree. The escalation model in this clause works in three stages: first direct negotiation between senior representatives, then mediation with an independent third party, and only as a last resort a binding decision by a court or arbitral tribunal.

    The advantage of this tiered approach is that many disputes are resolved in the first or second stage, avoiding the cost, delay, and publicity of court proceedings. Mediation is typically faster and less expensive than litigation and better preserves the commercial relationship.

    Deloitte and DocuSign (2024) estimate that $2 trillion is lost globally each year through poor contract management. A portion of that loss stems from legal disputes that could have been prevented by a clear escalation framework. Ironclad (2025) notes that 92% of contract management errors are human errors. A well-drafted dispute clause reduces the risk that a mistake escalates into a protracted legal battle.

    When should you use this clause?

    A dispute resolution clause belongs in every commercial contract. Without one, the governing law determines which court has jurisdiction, which in cross-border contracts can produce unexpected results.

    Choose Option A (national courts) if you want an accessible procedure with the possibility of appeal. Choose Option B (arbitration) if confidentiality matters, if you want a technically specialist tribunal (e.g. for construction or technology disputes), or if you need a decision that can be enforced internationally under the New York Convention.

    Bear in mind that arbitration is generally more expensive than litigation in national courts but tends to be faster and is conducted in private. For lower-value contracts, the national courts are usually more practical.

    Customize these elements

    • 1Choose between Option A (national courts) and Option B (arbitration) and delete the option you do not use
    • 2Set the negotiation window in paragraph 2 at 15 to 30 Business Days. Too short gives insufficient room to negotiate, too long delays resolution unnecessarily
    • 3For international contracts, specify the language of proceedings and the governing law explicitly
    • 4Consider adding expert determination as an intermediate step: for technical disputes, an independent expert may resolve the issue faster than mediation
    • 5For cross-border contracts, add a reference to the New York Convention (1958) to facilitate international enforcement of arbitral awards

    Sources

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