Uncertainty in dispute resolution clauses

Where a dispute arises under a contract, the parties must attempt to settle that dispute through the procedure set out in the dispute resolution clause (DRC). Sometimes, one party considers that this procedure cannot be followed, or does not adhere to the procedure, and instead initiates proceedings in court to resolve the dispute. Where this occurs, the other party to the contract can apply to the court for a stay of those proceedings in order to force the litigious party to fall back upon the contractual procedure. The court’s power to award a stay is discretionary.

The party opposing the stay must persuade the court that there are good grounds for the court to exercise its discretion to allow the court action to proceed and so preclude the contractual mode of dispute resolution. This can be discharged only by showing that, in the particular case, the dispute is not amenable to resolution by the contractual mechanism the parties have chosen. One of these grounds is that the DRC is void for uncertainty…

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