How do I set up a good dispute resolution mechanism?

A good dispute resolution mechanism ensures that problems are resolved without immediately going to court. You establish how complaints are reported, how you attempt to resolve them (for example, through mediation), and which judge or arbitrator ultimately makes the decision. This saves costs and preserves the relationship.

Why a dispute resolution mechanism?

Conflicts cost money, time, and goodwill. With a dispute resolution mechanism, you agree in advance on how to handle problems, so that you do not immediately end up in court for every dispute. You often find such an arrangement in the general terms and conditions and in the articles of association of a company.

Start a complaints procedure

Establish how a complaint must be reported: within what timeframe, in writing, and with what information. A clear procedure prevents complaints from arriving too late or incomplete and gives you the opportunity to resolve them quickly.

Mediation or arbitration

You can agree that the parties first attempt to resolve the matter through consultation or mediation before resorting to litigation. You can also opt for arbitration or binding advice instead of the ordinary courts. Each route has advantages and disadvantages in terms of costs, speed, and confidentiality.

Choose law and justice

Determine which law applies and which court has jurisdiction. Especially with international contracts, a clear choice of forum and law prevents you from ending up in an unfamiliar legal system. Tailor the arrangement to your business and your customers.

Frequently Asked Questions

Where do I record a dispute resolution procedure?

Often in your general terms and conditions, and for companies also in the articles of association or a shareholders' agreement.

Is mediation mandatory if I agree to it?

You can agree that the parties attempt mediation first. A well-formulated clause makes that step enforceable before litigation is initiated.

May I choose the competent court myself?

Within limits, this is possible via a choice of forum, certainly between businesses. Restrictions apply to consumers.

Drafting a strong dispute resolution mechanism?

Our legal experts incorporate a dispute resolution clause into your general terms and conditions or contracts. View our litigationor contract lawteam, or schedule a free consultation.