A tiered dispute resolution clause, also known as a multi-tiered dispute resolution clause, is a provision included in a contract that outlines a sequential process for resolving disputes between the parties. It establishes a hierarchy of dispute resolution methods that the parties must follow before resorting to more formal and adversarial processes such as litigation.

Typically, a tiered dispute resolution clause consists of two or more stages, each representing a different method of resolving disputes. The specific stages can vary depending on the preferences and needs of the parties, but common tiers include negotiation, mediation, conciliation, arbitration, and litigation.

Negotiation: The parties agree to first attempt to resolve any disputes amicably through good faith negotiations. They may engage in direct discussions or appoint representatives to negotiate on their behalf.

Mediation/Conciliation: If the negotiation stage fails to yield a resolution, the parties agree to move to a more structured method of dispute resolution such as mediation or conciliation. They appoint a neutral third-party mediator or conciliator who facilitates the discussions and helps the parties reach a mutually acceptable settlement.

Arbitration: If mediation or conciliation is unsuccessful, the parties agree to submit the dispute to binding arbitration. They appoint one or more arbitrators who hear the case, consider the evidence and arguments presented by both sides, and issue a legally binding decision, known as an arbitration award.

Litigation: If all previous stages fail to resolve the dispute, the parties may proceed to litigation, where they submit the matter to a court of law for resolution. Litigation involves formal court proceedings, including hearings, evidence presentation, and judgment by a judge or jury.

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