Mediation Clause
Also called: Mandatory Mediation · Alternative Dispute Resolution Clause
A mediation clause requires parties to attempt resolving a dispute through a neutral mediator before escalating to arbitration or litigation. Unlike arbitration, mediation isn't binding — the mediator helps facilitate a resolution, but either party can still proceed to formal proceedings if it fails.
In more detail
Mediation is typically used as a mandatory first step in a tiered dispute-resolution clause, not as the final word — the goal is to resolve disputes faster and more cheaply than arbitration or litigation, reserving the formal process for disputes that genuinely can't be resolved informally.
Because mediation isn't binding, a mediation clause on its own doesn't actually resolve anything if one party isn't genuinely willing to negotiate — its main value is procedural: creating a structured, time-bound opportunity to settle before more expensive and adversarial options begin.
A well-drafted clause specifies a defined mediation period (commonly 30-60 days) after which either party can proceed to the next step regardless of outcome — an open-ended mediation obligation can otherwise be used to stall the other side's access to a binding remedy.
A commercial dispute arises under a contract with a tiered dispute clause. Before either party can initiate arbitration, they must first attempt mediation for up to 30 days. If mediation doesn't resolve the dispute within that window, either party can proceed to arbitration as the next step.
What our lawyers check
- Whether mediation is a mandatory precondition to arbitration or litigation
- The defined time limit on the mediation period
- How the mediator is selected
- Whether either party retains the right to seek urgent interim relief despite the mediation requirement
Contracts where this clause matters
Related terms
This definition is general information about commercial contracting practice, not legal advice. How a clause operates depends on the specific wording of your agreement and the law that governs it. For advice on your contract, have it reviewed by a lawyer.
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