Alternative Dispute Resolution Clause
(Multi-Tiered)

Summary

This multi-tiered alternative dispute resolution (ADR) clause template (also known as an escalation clause) requires the parties to engage in a series of steps prior to submitting disputes to binding arbitration or litigation. Such steps include negotiation, mediation, or other potential non-binding alternative resolution procedure. This template includes practical guidance and drafting notes. This template assumes the following: (1) the parties are both U.S. entities and the transaction takes place entirely in the U.S. (if one or both of the parties are foreign entities and/or if any part of the transaction takes place outside of U.S., the terms may need modification to comply with applicable foreign law and ensure enforceability); and (2) the terms are neither industry-specific nor state specific. Industry-specific and state specific laws may apply to certain transactions, and in such instances, the terms hereof may require modification in order to achieve compliance. For additional guidance on alternative dispute resolutions, see Multi-tiered, Hybrid, and Carve-Out Dispute Resolution Clauses, Arbitration Clause Drafting. and Arbitration Clauses Resource Kit. For a full listing of related clauses, see General Commercial Contract Clause Resource Kit.