Generally speaking, a “multi-tiered” dispute resolution clause is a contractual provision requiring that parties to a dispute engage in certain preliminary settlement-focused efforts as a prerequisite to bringing a claim in arbitration or filing a court proceeding. Such provisions typically require that the parties meet and make some level of effort during a defined term to settle the dispute (often identifying the persons who must be involved) before either party can file a claim against the other under the relevant contract. Multiple preliminary steps are sometimes mandated, such as informal negotiations followed by formal mediation, prior to filing. Examples of these clauses are included in “Compilation of Sample Mediation Clauses,” issued in 2016 by the New York City Bar Association’s Alternative Dispute Resolution Committee.
Such clauses are most frequently found in commercial contracts, but they also are present in many forms used in non-commercial relationships like employment contracts or HR policies, and they can cover tort claims as well as more standard commercial dealings. It is widely noted that they are used predominantly in construction contracts, and while the construction industry routinely incorporates them, they are now fairly prevalent in all types of contracts and in a variety of industries.
