Contractual Clauses To Include To Manage A Dispute Before One Actually Arises

• Published date: 14 February 2022
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law, Contracts and Commercial Law
• Law Firm: Giambrone & Partners
• Author: Mr Khizar Arif

In a world where globalisation has become straightforward, the opportunities for commerce across national borders have exponentially increased in the past decade or so.

Inevitably the frequency and scope of cross-border commercial disputes have also increased commensurately. For savvy, modern commercial companies it has become more important than ever to understand the nuances when dealing with cross-border commercial contracts for many reasons, not the least, in order to preserve the right to pursue a claim, should the need arise. Here are some things to be aware of that may affect that right.

Contractual clauses

It is vital that you are advised on which clauses, if any, you should include in your contract particularly to ensure that there is no uncertainty regarding the pursuit of a claim should a contentious issue rear up. Clauses that facilitate the pursuit of a claim in the manner which best suits you can be drafted and incorporated within the contract to protect your interests.

Jurisdiction clauses

For contracting parties from different jurisdictions, it is important, given the courts' potential to dramatically differ from jurisdiction to jurisdiction in terms of cost, efficiency and procedure, to ensure that a jurisdiction clause is also incorporated in the contract to enable you to pursue your claim in the jurisdiction most suitable to you. To that end, a jurisdiction clause in the contract will dispel any ambiguity down the line on exactly in which court system or court a dispute would be settled.

Jurisdiction clauses can be exclusive, non-exclusive or unilateral. Exclusive clauses limit any dispute to the courts of one jurisdiction. Non-exclusive clauses allow either party to take the dispute to the court of any jurisdiction they find appropriate. Unilateral clauses allow only one party the choice of jurisdiction. If a contract fails to specify jurisdiction, the parties or the court may have to rely on the Forum non conveniens doctrine to try the action in another more appropriate court.

In order to safeguard your interests, you must select the most suitable jurisdiction to pursue a claim in advance, if you are given a choice, which will avoid any surprises should a dispute spring up. It is paramount that you are given the best legal advice on which courts would be most suitable for a claim as if you do not succeed you may not be able to pursue the same claim again in a foreign court or otherwise.

Governing law clauses

Governing law clauses, or...