An MSA sets the overarching terms governing ongoing services between parties, providing a foundation for future statements of work or projects. This playbook breaks down best practices for managing risk, defining scope, and balancing flexibility with legal protection.
Why This Matters: Efficient dispute resolution reduces the cost and uncertainty of litigation and ensures predictable legal frameworks.
Negotiation strategy
If you're the Company:
The Company should aim to include arbitration in a neutral jurisdiction to minimize litigation costs and ensure a fair process. It is also advisable to specify a governing law that aligns with the Company's strategic interests.
If you're the Contractor:
The Contractor should negotiate for a jurisdiction that is convenient and familiar to them, and consider proposing mediation as a first step to resolve disputes amicably.
Essential elements
1
Neutral Jurisdiction
Selects a fair location.
2
Governing Law
Specifies applicable legal framework.
3
Dispute Mechanism
Outlines resolution process.
Action framework
ACCEPT
Propose edits if the clause lacks a neutral jurisdiction or omits mediation/arbitration steps.
EDIT
Reject if the clause mandates litigation in an unfavorable jurisdiction without alternatives.
ADD
Add language specifying mediation and arbitration if not present.
PRO TIP
Always ensure the dispute resolution clause aligns with your strategic goals and provides a clear, efficient process.
Example clauses
FAVORABLE
Arbitration in Neutral Jurisdiction
"Disputes shall be resolved through arbitration in [Neutral Jurisdiction], governed by the laws of [Preferred Jurisdiction]."
NEUTRAL
Litigation in Fallback Jurisdiction
"Litigation in [Fallback Jurisdiction] under its laws."
UNFAVORABLE
Unilateral Jurisdiction Clause
"All disputes shall be resolved exclusively in the courts of [Unilateral Jurisdiction]."
Fallbacks
High-Risk Projects
In high-risk projects, ensure the clause includes robust arbitration provisions to manage potential disputes efficiently.
Cross-Border Transactions
For cross-border deals, select a neutral jurisdiction and international arbitration rules to avoid bias.
Long-Term Contracts
In long-term agreements, include periodic review of the dispute resolution clause to adapt to changing circumstances.
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