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Contractual claim procedure

A commercial dispute settlement is a method of resolving conflicts that arise in the course of a company's business operations. The procedure for resolving the conflict is based on a specific claim procedure, the terms of which are predetermined by the transaction's parties. In the contract, interested parties should specify the claim procedure for resolving disputes.

A party who has failed to fulfill its obligations to the other parties to the agreement, thereby infringing on their rights or legitimate interests, must restore them without waiting for the injured party to file a claim or go to court (unless other ways of resolving conflicts were specified in the agreement). To avoid such issues, it is prudent to specify and include in the contract all nuances of resolving conflict situations and methods suitable for the parties to use.

The clauses of the agreement relating to the settlement of commercial disputes are important in ensuring the observance of the parties' rights and obligations; therefore, subject matter experts advise not to draft them in a template, but to consider the context of the contract.

The following are the main considerations when writing such paragraphs:

  • which method of dispute resolution will be used, arbitration or the traditional judicial system; 
  • jurisdiction for the hearing;
  • which country's laws will apply.

The answers to these questions are directly related to the case's outcome and cost level.

Given the foregoing, it is critical to consider provisions for establishing a claim procedure for resolving a dispute when drafting a contract. During proceedings, lawyers rely on contract clauses as well as the terms of the applicable law, as this is the primary approach when participating in any case. Negotiations and a claim procedure are two important tools in the conflict resolution procedure. With these considerations in mind, negotiators must consider the terms of the conflict during the negotiation process. This article discusses the key nuances to keep in mind when writing dispute resolution provisions.

The Importance of Including Proceedings in Contracts

If the parties want the English courts to enforce their agreements on the issue of proceedings, the agreement's related clauses must be clearly worded. Otherwise, the method of proceeding in the case will be decided by the judiciary.

To comprehend the meaning of the claim order, you must first understand the distinction between the following concepts:

  • Legal Framework – the term clause refers to the statutory law that governs the arrangement.
  • Regulations on the resolution of the conflict between the parties – lays out how the conflicting parties intend to resolve disputes arising from their agreements.

Because they are frequently confused (despite having a significant difference), uncertainty arises – the governing law and the choice of court are combined into one clause of the agreement. In modern practice, they are considered in a different order.

The term «Dispute Resolution Clause» or «Jurisdiction Clause» refers to contractual terms that assist the parties in deciding whether to conduct the case through arbitration, mediation, or litigation. When the parties want a specific court to hear their case, this section is included.

What provisions should be included in a contract to resolve a contractual dispute

When establishing a claim procedure to resolve disputes, there are several major considerations that must be made during the contract preparation process:


Which court has jurisdiction over this agreement?

Before you start the agreement preparation process, make certain that you understand all of the nuances of the regulatory legal acts upon which the deal will be premised. In practice, the parties almost always use English law as the law in force.


Is there an Alternative Dispute Resolution (ADR) clause in this agreement?

This section of the agreement details the sides' behavior in settling disputes until a conditional conclusion is made. Such a clause or provision will allow for the adoption of a mutually agreed-upon conflict resolution. The three basic forms of mandatory ADR are agreements, intervention, and fair performance assessment.


Is there a stipulation (jurisdictional clause)?

This approach considers the mandatory form of conflict resolution and allows the case to be referred to an objective third party. Arbitration and expert opinion are two of the most commonly used alternatives to binding judgment and litigation.


Is there a contract escalation clause?

The escalation clause requires the representatives of the sides to resolve the case peacefully through the negotiation period. Furthermore, such a condition includes step-by-step instructions on what must be completed before making a firm precedent.

Once a disagreement has been notified, there's many stages to settling it: 

  • internal business bargaining; 
  • use of one of the Adjudicative forms; 
  • and making a firm precedent.

Escalation conditions are enforced by the judiciary. Before implementing this item, it is recommended that you consult with an experienced commercial lawyer. Our company's specialized specialists will assist you in resolving this issue legally.

How to Avoid Contract Disputes

A pre-planned tactic during the contract talks and drafting process could indeed actually prevent a contractual dispute – a clear and precise draft agreement is required. The agreement should include the subject of the transaction, as well as the main conditions and precise conditions. The deal should also include information about the specified quality, standards for setting quality level, and a summary of the person who determines compliance.

How to Avoid Contract Disputes

Contractual legal assistance

Our team of commercial contracting and conflict resolution experts can assist you in avoiding contractual disputes. Fill out a special form to contact our experts, and our specialists will provide you with any assistance you require on the resolution of an international dispute, assistance in the process of drafting a contract, and other legal aspects related to the process of your company's business activities with partners, clients, and contractors.


What exactly is commercial conflict resolution?

The process of considering a conflict situation that has arisen during the course of doing business and finding a solution to the problem is referred to as commercial dispute resolution.


What is a contract dispute resolution clause?

When parties sign an international treaty, they frequently include a clause addressing conflict resolution. This section explains how to resolve an international dispute that may arise in connection with the contract or the subject matter of the agreement. In the event of litigation, the parties will be required to follow these terms.


What are the methods for resolving disputes?

If you need to settle a business dispute, you can:

  • file a lawsuit and initiate legal proceedings; 
  • arbitrate the dispute; 
  • mediate the dispute; 
  • negotiate the dispute;
  • аpply to the appropriate authorities for an early neutral evaluation; 
  • use other ADR methods.
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