THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS A CHECKLIST FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD
NOT BE USED AS A SUBSTITUTE FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.
DISPUTE RESOLUTION – CHECKLIST AND SAMPLE WORDING
Page 2 of 7
PPP in Infrastructure Resource Center for Contracts, Laws and Regulations (PPPIRC) Victoria Rigby Delmon, LEGPS
http://www.worldbank.org/ppp April 2008
In drafting interim dispute resolution provisions thought should be to imposing strict
timeframes within which each stage is to be completed, with the opportunity for a party to
move to the next stage of dispute resolution if the timeframes are not respected, so as to avoid
wasting time at a juncture that may be critical to the project.
3. Is there a court system which is appropriate and the parties are willing to submit to?
Local advice should be taken on the local court system, length of time for processing claims,
objectivity of judiciary, quality of the judiciary and whether it has had experience of similar
contractual arrangements, whether the procedures of the court are clear and are followed, the
cost of litigation and the time and cost involved in enforcing judgments. A government party
is likely to want to be subject to its court system but an operator, particularly a foreign one,
may be unwilling to subject itself to an unfamiliar system and the potential that local courts
will be loathe to rule against government interests. Where foreign lenders are involved they
may also be anxious to avoid local courts. The compromise is usually to follow an interim
dispute resolution procedure and then proceed to arbitration (see 5 below).
4. If the parties are willing to submit to courts in a specific jurisdiction: -
The contract should specify this. They may also wish to identify particular courts within
the country’s court system, for example commercial courts or an arbitration mechanism
administered by the courts. The laws determining what jurisdiction applies to a particular
situation can be confusing and sometimes conflicting, particularly where a transaction
involves different nationals or services being provided in a third country, with several
courts being able to claim jurisdiction.
To avoid or limit this possibility, the jurisdiction clause could be worded as follows:
“The parties irrevocably submit to the exclusive jurisdiction of [ ] Courts for the
determination of disputes arising under this contract”.
This provision is called an “exclusive jurisdiction clause” and goes as far as possible to
prevent disputes being heard in other jurisdictions. How these clauses are interpreted in
practice may vary and so local counsel should be consulted.
There may be instances where the parties wish to have flexibility as to jurisdiction or
where one party with greater negotiating power wishes the other party to be bound as to
jurisdiction, whilst wanting to maintain flexibility of jurisdiction for itself. In such cases a
non-exclusive jurisdiction clause may be appropriate, such as, 'The parties submit to the
jurisdiction of [ ] Courts'.
A variation would be “For the benefit of Party B, Party A submits to the exclusive
jurisdiction of [ ] courts”.
This may be of interest where enforcement of awards may occur abroad, and where such
courts view an exclusive jurisdiction clause as restrictive of their ability to enforce award
(in particular arbitration awards).
The law around non-exclusive jurisdiction clauses is complex and local advice should be
sought.