Dispute Resolution Clauses: Arbitration, Mediation, and Litigation

The dispute resolution clause determines how disagreements are handled — and choosing wrong can cost you time, money, and leverage.

Litigation (Court)

Disputes resolved in court. Provides formal procedures and right to appeal but is the slowest and most expensive option. Specify governing law and jurisdiction.

Arbitration

Private process with a neutral arbitrator. Faster and less formal than litigation, but limited discovery, no appeal, and binding. Specify the administering organization (AAA, JAMS), location, and who pays fees.

Mediation

Non-binding process with a neutral mediator. Least adversarial, most cost-effective, and preserves relationships. Many contracts require mediation as a first step before arbitration or litigation.

What to Negotiate

Consider a multi-step clause: mandatory mediation first, then arbitration if mediation fails. Ensure the venue is fair to both parties. Include a carve-out for emergency injunctive relief in court.