The Enforcement of Multi-Tiered Dispute Resolution Clauses: Contemporary Judicial Opinion

Abstract

Multi-tier dispute resolution clauses have come to be recognised as a commonly accepted method of dispute resolution clauses in commercial contracts - they often find place in construction contracts. The article discusses the conceptual nature of the multi-tiered clauses and explains the benefits of these clauses, as well as a few concerns related thereto. The article also refers to the UNCITRAL Model Law on Commercial Conciliation on the enforceability of the ADR tiers in the multi-tier dispute resolution clause, and the statutory regime governing enforceability of the multi-tier clauses in a few jurisdictions. It further discusses the implications of non-compliance of each of these tiers, especially with reference to the judicial opinion, in common law and civil law systems, with regard to the enforceability of these tiers – importantly, it addresses the question if and when these clauses are to be seen as condition precedent to an arbitration/litigation. The article concludes by setting out the common pitfalls to be avoided and the pointers to be considered when drafting an enforceable multi-tiered dispute resolution clause.