What is a dispute resolution clause?

A dispute resolution clause is a contractual provision that establishes how parties will handle disputes related to their agreement. If no alternative is specified in a contract, parties that cannot resolve a contract-related dispute themselves generally have to resort to litigation to settle it, which can be both time-consuming and expensive. The dispute resolution clause allows contracting parties to agree on one or more alternative dispute resolution options with the aim of streamlining this process. As the examples below illustrate, dispute resolution clauses are found in a wide variety of contracts, including service agreements, supply agreements, leases, license agreements, joint venture agreements, and employment agreements.

How do you review the dispute resolution clause in contracts?

Where a dispute resolution clause appears in its own, clearly labelled section of an agreement (as is the case with many of the examples below), it will be relatively easy to locate. In some cases, however, it may not appear in a clearly marked section (see examples 1, 5 and 8 below); and in other cases, like example 9 below, it may be included in a seemingly unrelated section of the agreement, increasing the risk that it could be overlooked. The clause also typically contains at least one instance of the word “dispute” (every example below does), which can help with finding it.

After locating all the dispute resolution language in each agreement, key things to focus on when reviewing these provisions include:

1. What disputes are covered by the clause. Many dispute resolution clauses cast a wide net to cover a broad range of potential disputes. These may include disputes concerning the interpretation of the contract, the validity of the contract, and a party’s breach of the contract as well as non-contractual disputes (e.g., those relating to a party’s negligence or misrepresentation). As the examples below illustrate, some clauses may use phrases such as “arising out of the agreement”, “in connection with the agreement” or “relating to the agreement” (or some combination of those) to indicate that the clause is meant to have an expansive scope. If a clause describes the scope in more specific terms, consider whether this may limit its application. Be sure, as well, to pay attention to any language that is unclear - for instance, “the business that may come up from it” in example 1 below - as this may make it difficult to define the full range of disputes to which the clause applies.
2. Process for resolving disputes. As noted above, the dispute resolution clause typically establishes alternatives to litigation as avenues for the parties to resolve disputes. Common alternatives are arbitration and mediation. In some cases, the clause may stipulate the appointment of an independent third party (other than a mediator or arbitrator) to help settle the dispute - particularly in cases like example 15 below, where the dispute may pertain to valuation concerns regarding the contract’s pricing (or other financial) terms. Note, as well, that the clause may have a staged dispute resolution process, starting with the parties attempting a negotiated settlement before escalating the matter to mediation, arbitration, and possibly even litigation (see, for instance, examples 3, 6 and 11 below). Where the clause establishes a staged approach to resolving disputes, it may also set time limits for moving from one stage to another. Example 6 below, for instance, gives the Chief Executive Officers of the parties up to 20 days to resolve the dispute themselves before proceeding to arbitration. Similarly, example 11 below allows a maximum of 10 business days per stage before escalation to the next. Finally, pay attention to whether the clause uses mandatory or discretionary language when describing mediation, arbitration or any other dispute resolution process involving third parties. Example 4 below, for instance, states that the parties “may” submit a dispute to mediation “upon mutual agreement”, which indicates that mediation is merely an option available to the parties rather than a mandatory step in the dispute resolution process.
3. What procedural rules govern the dispute resolution process. Particularly, in cases where the clause establishes arbitration as the process for resolving disputes, the clause will often establish which procedural rules govern the arbitration (see, for instance, examples 1 and 2 below). Where mediation is the option for dispute resolution, it may be up to the parties to agree on the mediation procedure (see example 4 below). In addition, the clause may also provide additional procedural details - such as selection of arbitrators or mediators as well as the location where the dispute resolution proceedings will take place - and these should be reviewed carefully.
4. Payment of costs. The clause may also address responsibility for attorney’s fees and other costs related to the arbitration, mediation, etc. It may provide, for example, that the parties will cover their own costs and share the costs of the arbitrators, mediators, etc. (see examples 6, 8 and 15 below). Alternatively, the clause may provide that the losing party has to pay the winning party’s costs (see examples 2 and 13 below).
5. Whether the dispute resolution process is binding. The clause will usually establish whether any decision reached pursuant to the dispute resolution process is either (i) binding on the parties or (ii) can be contested or appealed. Where the process is non-binding, be sure to confirm the matters that may be contested or appealed and the venue(s) for any such contest or appeal. Example 3 below, for instance, permits parties to appeal an award on either a question of law or a question of mixed fact and law to a specially convened panel of Appeal Arbitrators. In the case of arbitration, in particular, note that the designated procedural rules may also contain details regarding rights of appeal and should be consulted on this point. Where the process is binding, reviewers should confirm whether certain types of dispute are exempt from this requirement. Furthermore, particularly in cases of binding arbitration, be sure to consult the applicable procedural rules, as these may provide for a right of appeal despite the binding nature of the clause.

As with the review of any contractual provision, it’s also important to be aware of other provisions that may affect the interpretation of dispute resolution clauses. The governing law clause, for example, establishes which jurisdiction’s laws apply to a contract, which may be useful in the context of disputes involving the contract - especially those pertaining to its interpretation. The venue clause establishes which courts have jurisdiction over litigation relating to the contract. As noted above, the dispute resolution clause may establish a particular location for arbitration or mediation proceedings; however, the venue clause may be useful to consider in contracts where, for instance, the dispute resolution clause does not preclude parties from escalating a dispute to litigation.

Software that uses AI to identify and extract dispute resolution clauses (as well as other terms that may affect their interpretation) can accelerate the work of finding these provisions and enable a more comprehensive review than can otherwise be done manually.

Examples of the dispute resolution clause

Below are some examples of dispute resolution clauses from different kinds of agreements. While these examples do not necessarily cover the full range of dispute resolution clauses one may encounter, they are meant to illustrate the degree to which these provisions can vary from contract to contract. Where an example includes broader contextual language, the dispute resolution clause is highlighted in bold.

Example 1: From a Purchase Agreement

5.2. In case of any dispute arising from the interpretation, enforcement, nullity or termination of this Agreement and the business that may come up from it, the Parties, expressly waiving their privileges, shall submit to arbitration under the Rules of Arbitration of the International Chamber of Commerce. The parties specifically agree on accepting the resulting arbitrators award.

Example 2: From a License Agreement

DISPUTE RESOLUTION. The Parties agree to exert their best efforts to resolve disputes arising from this License Agreement. If the Parties fail to resolve a dispute pursuant to this Article, the Parties agree to resolve that dispute by arbitration conducted in the State of Ohio in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the “AAA”) then in effect. The arbitration shall, to the extent permitted by the rules of the AAA then in effect, be conducted on an expedited basis. The arbitration panel shall consist of three neutral arbitrators appointed by the AAA. All costs of the arbitration, including, without limitation, the reasonable attorney’s fees and disbursements of the prevailing party, shall be included in any award and shall be borne by the unsuccessful party (or, at the discretion of the arbitrators, may be prorated between the parties in such proportion as the arbitrators deem equitable). Any award may be confirmed in any court of competent jurisdiction.

Example 3: From a Management Services Agreement

ARTICLE 8 - DISPUTE RESOLUTION

8.1 Dispute Resolution

The Parties will in good faith attempt to resolve any controversy or dispute arising out of or relating to this Agreement, its negotiation, validity, existence, breach, termination, construction or application, or the rights, duties or obligations of any party to this Agreement (a “Dispute”), as expeditiously as possible without disrupting the provision of Services pursuant to this Agreement, including by escalating the discussions or negotiations with respect to any such Dispute within their respective organizations, prior to referring any such Dispute to arbitration pursuant to Section 8.2. Notwithstanding any unresolved Dispute, including any such Dispute referred to arbitration pursuant to Section 8.2, each Service Provider shall continue to provide Services in accordance with this Agreement, and each Service Recipient shall continue to make payments in accordance with this Agreement so as to facilitate the continued operation of the respective businesses of the Parties pending the resolution of such Dispute.

8.2 Arbitration

(a) Subject to Section 8.1, any Dispute shall be referred to and determined by arbitration before a single arbitrator to be administered by ADR Chambers Inc., based in the City of Toronto, in accordance with its Arbitration Rules and the Ontario Arbitration Act, 1991 (the “Arbitration Act”).

(b) The seat of the arbitration shall be Ontario and hearings shall be conducted in the City of Toronto.

(c) A Party to the arbitration (the “Appellant”) may appeal an award on a question of law or a question of mixed fact and law by delivering a written notice of appeal (“Notice of Appeal”) to the party opposite (the “Appeal Respondent”) within 10 days of receipt of the award. With the Notice of Appeal, the Appellant shall name three persons whom the Appellant is prepared to nominate as appeal arbitrators, each of such persons to be a former appellate judge of the Ontario Court of Appeal or the Supreme Court of Canada (an “Appeal Arbitrator”). Within seven days of the receipt of the Notice of Appeal, the Appeal Respondent shall by written notice to the Appellant select one or more of the three persons named by the Appellant or provide the Appellant with a list of three persons who are Appeal Arbitrators. Within seven days of receipt of the Appeal Respondent’s list, by written notice to the Appeal Respondent, the Appellant shall select one or more of such persons and/or provide a further list of three Appeal Arbitrators. The Parties shall continue to exchange lists of three Appeal Arbitrators in this fashion until three Appeal Arbitrators are selected. If the parties are unable to agree upon three Appeal Arbitrators within 20 days of the receipt by the Appeal Respondent of the Notice of Appeal, each party shall appoint one Appeal Arbitrator, and the two Appeal Arbitrators thus appointed shall appoint a third Appeal Arbitrator. Where the two Appeal Arbitrators fail to agree on the third Appeal Arbitrator within 10 days of their appointment, either Party may provide copies of the exchanged lists to ADR Chambers Inc. which shall appoint the third Appeal Arbitrator. Where an appeal is taken, the award of the Appeal Arbitrators shall be final and binding upon the Parties and there shall be no further right of appeal. The award of the Appeal Arbitrators shall be an arbitral award under the Arbitration Act.

(d) Arbitration in accordance with the provisions of this Section 8.1 shall be the sole dispute resolution mechanism in respect of any Dispute except it is not incompatible with this arbitration agreement for any Party to request, before or during the arbitral proceedings, from a competent court any interim, provisional or conservatory relief and for the court to grant such relief.

(e) The Parties undertake as a general principle to keep confidential all information concerning the existence of the arbitration, all awards or appeals in the arbitration, all materials in the proceedings created or used for the purpose of the arbitration, and all materials and information produced during the arbitration and not in the public domain (“Confidential Arbitration Information”) save and to the extent that disclosure may be required of a Party by legal duty, to protect or pursue a legal right or to enforce or set aside an award in bona fide Proceedings before a competent court. Each Party shall obtain and deposit with the arbitrator a signed confidentiality undertaking from its legal counsel, independent experts and consultants regarding the Confidential Arbitration Information.

Example 4: From a Intellectual Property Purchase Agreement

6.6 Dispute Resolution; Mediation. In the event of any controversy or dispute related to or arising out of this Agreement or the transactions contemplated hereby, the parties agree to promptly meet and confer in good faith to attempt to resolve the controversy or dispute without an adversarial proceeding. Upon the mutual agreement of the parties, if the controversy or dispute is not resolved, the parties may submit the controversy or dispute to non-binding mediation upon terms to be mutually agreed by the parties at the time of the mediation. The parties reserve the right to contest the mediator’s decision in a formal judicial process.

Example 5: From an Operating Lease Agreement

(e) Notwithstanding subsection (b) in this Section 23, and in addition to any of its rights to otherwise pursue remedies under or in respect of this Lease, each of the Lessor and the Lessee shall have the right, at its option, under all circumstances, to institute binding arbitration, and that if such arbitration is so elected, with respect to any matter governed by this Lease or any other Operative Document or in respect of any of the transactions contemplated hereby or thereby, or the breach, termination or invalidity thereof or in connection therewith, and any dispute, controversy and claim relating thereto, shall be settled by arbitration in accordance with the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce, with the place of arbitration in Stockholm, Sweden, and each party hereby irrevocably agrees that, if either party shall elect to pursue such arbitration, the other party hereto shall submit thereto and will be bound thereby. The Arbitral Panel shall be composed of three (3) arbitrators. The language to be used in the arbitral proceedings shall be English.

Example 6: From a Production Agreement

DISPUTE RESOLUTION. Any controversy, claim, or dispute (the “Dispute”) between the Parties arising out of or relating to this Agreement, or the breach thereof, shall be submitted to the Parties’ respective Chief Executive Officers for twenty (20) days for resolution. If the Dispute has not been resolved in such period, the Dispute shall be resolved through arbitration before three (3) arbitrators. Such arbitration shall take place in Philadelphia and shall proceed in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“Commercial Rules”) and the laws of Pennsylvania without regard to the provisions thereof concerning conflict of laws. Within thirty (30) calendar days of either Party making a demand for arbitration, the Parties shall each select one (1) arbitrator. A third arbitrator shall be selected by the arbitrators selected by the Parties within ninety (90) days of the demand for arbitration. In the event that either Party shall fail to appoint its arbitrator, or the two arbitrators selected by the Parties fail to appoint the third arbitrator, in either case within the prescribed time period, then either Party may apply to the American Arbitration Association for the appointment of such arbitrator. The determination of a majority of the panel of arbitrators shall be the decision of the arbitrators and shall be binding regardless of whether one of the Parties fails or refuses to participate in the arbitration; said determination shall be enforceable by any court of competent jurisdiction. Each Party shall pay for the arbitrator it selects with the cost of the third arbitrator being divided equally between the Parties. All other costs related to the arbitration shall be borne by the Party incurring such costs, unless otherwise agreed to by the Parties.

Example 7: From a Transition Services Agreement

Section 8.11 Dispute Resolution.

(a) Any dispute, controversy or claim arising out of, relating to or in connection with this Agreement, or the breach, termination or validity thereof (a “Dispute”), shall be resolved by submitting such Dispute first to the supervising managers of the Parties most immediately responsible for the issue giving rise to the Dispute who shall seek to resolve such Dispute through informal good faith negotiation. If the Dispute is not resolved at that level of management within seven (7) Business Days after the claiming Party verbally notifies the other Party of the Dispute, then the Dispute shall be escalated to the applicable Parties’ designated senior executive for resolution.

(b) In the event such designated senior executives fail to meet or, if they meet, fail to resolve the Dispute within an additional seven (7) Business Days, then the claiming Party will provide the other Party with a written notice describing the nature of the Dispute, and the Dispute shall be submitted to and finally resolved by arbitration in accordance with the CPR Institute for Dispute Resolution Rules for Non-Administered Arbitration (“CPR Rules”) then currently in effect, except the scope of discovery, if any, shall be in accordance with the Federal Rules of Civil Procedure then currently in effect (as interpreted and enforced by the applicable arbitration panel). The composition of the arbitration panel shall be determined in accordance with CPR Rule 5.4. The arbitration panel shall consist of three arbitrators. Notwithstanding the foregoing, if any dispute otherwise subject to arbitration pursuant to this Section 8.11(b) involves, as a party in their individual capacity, multiple senior managing directors of BX who have agreed to exclusive arbitration clauses using the then-existing Rules of Arbitration of the International Chamber of Commerce (“ICC Rules”), then all references herein to “CPR Rules” shall instead refer to the ICC Rules and the arbitrator-selection process contained in such other agreement.

(c) The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof; provided, however, performance under this Agreement shall continue if reasonably possible during any arbitration proceedings. The place of arbitration shall be in New York City, New York. The language of the arbitration shall be in English.

(d) The arbitral panel’s award shall be final, conclusive, and binding upon the parties to the arbitration subject only to the right (if any) of any party to commence proceedings to vacate the award on any ground permitted under 9 U.S.C. § 10.

(e) The procedures specified in this Section 8.11 shall be the sole and exclusive procedures for the resolution of any Dispute; provided, however, that a party may file a complaint to seek a preliminary injunction or other provisional judicial relief, including for the purpose of compelling a party to arbitrate, or enforcing an arbitration award hereunder, if, in its sole judgment, such action is necessary. Despite such action, the Parties will continue to participate in good faith pursuant to the procedures set forth in this Section 8.11.

(f) To the extent a party brings an action pursuant to clause (d) or (e) above, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE FEDERAL AND STATE COURTS OF THE STATE OF DELAWARE FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 8.11, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION DESCRIBED IN CLAUSE (a). The Parties acknowledge that the forum designated by this Section 8.11 has, and will have, a reasonable relation to this Agreement, and to the Parties’ relationship with one another.

(g) Each of the Parties hereto waives, to the fullest extent permitted by applicable Law, any objection which such party now or hereafter may have to personal jurisdiction or to the laying of venue of any such ancillary suit, action or proceeding brought in any court referred to in this Section 8.11 and agrees not to plead or claim the same. Each Party agrees (i) that service of process, summons, notice or document by registered mail addressed to them in accordance with Section 8.16 shall be effective service of process against it for any such Proceeding brought in any such court, (ii) to waive and hereby waives, to the fullest extent permitted by applicable Law, any objection which it may now or hereafter have to the laying of venue of, and the defense of an inconvenient forum to the maintenance of, any such proceeding in any such court, and (iii) that a final judgment in any such proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law. Nothing in this paragraph shall affect or eliminate any right to serve process in any other manner permitted by applicable Laws.

(h) EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUCH ANCILLARY SUIT, ACTION OR PROCEEDING BROUGHT IN ANY COURT REFERRED TO IN THIS SECTION 8.11.

(i) Unless otherwise agreed in writing, the Parties will continue to provide service and honor all other commitments under this Agreement during the course of dispute resolution pursuant to the provisions of this Section 8.11 with respect to all matters not subject to such dispute resolution.

Example 8: From a Distribution Agreement

(j) Any dispute between the parties arising out of this Agreement shall be submitted to final and binding arbitration of Santa Clara, California, U.S.A., under the then current Arbitration Rules and supervision of the American Arbitration Association, upon written notification and demand by either party hereto. The American Arbitration Association shall be requested to submit a list of prospective arbitrators experienced in commercial contracts involving the semiconductor industry, and the parties shall select a single arbitrator from such list to conduct the arbitration. The arbitrator may not award punitive or exemplary damages, and the decision and award of the arbitrator shall be final and binding and may be entered by any court of competent jurisdiction. The parties hereto agree to pay their own attorneys’ fees associated with the arbitration, and to pay the other costs and expenses of the arbitration as the rules of the American Arbitration Association provided. The provisions of California Code of Civil Procedure Section 1283.05 permitting the taking of depositions and obtaining discovery shall be applicable to any arbitration. Nothing herein shall prevent the parties from seeking interim relief in any court with competent jurisdiction.

Example 9: From a Design, Development Services and Production Agreement

14.0 GOVERNING LAW

THIS AGREEMENT AND ITS PERFORMANCE SHALL BE GOVERNED BY, SUBJECT TO, AND CONSTRUED IN ACCORDANCE WITH SWISS LAW. Any and all disputes arising in connection with the execution or interpretation of this Agreement or breach thereof which cannot be settled amicably shall be finally settled by arbitration, which shall take place in London and be carried out by the International Chamber of Commerce, in accordance with the ICC Rules of Conciliation and Arbitration, which are in force at the relevant time. The language to be used in such arbitration proceedings shall be English.

Example 10: From a Commercial Lease Agreement

30 DISPUTES

30.1 If any difference, dispute or question shall at any time arise between the parties hereto it shall be referred to an arbitrator appointed by the parties jointly and in default of agreement as to the person to be appointed:

30.2 If such difference, dispute or question relates to the interpretation of this Agreement the arbitrator shall be a solicitor or a barrister appointed on the application of any party by the president for the time being of The Law Society;

30.3 If such difference, dispute or question relates to any other matter the arbitrator shall be a chartered surveyor appointed on the application of any party by the President; and such arbitrations shall be conducted in accordance with the Arbitration Act 1996.

Example 11: From a Master Services Agreement

DISPUTE RESOLUTION: In the event of any dispute, controversy, or claim between the parties hereto arising from or relating to the subject of this Agreement (a “Dispute”), upon the written request of either party, each of the parties shall appoint a designated officer to meet and negotiate in good faith to resolve such Dispute. If they cannot resolve such dispute within ten (10) business days, the parties shall escalate the matter to an appropriate Senior Vice President. If the Senior Vice Presidents cannot resolve the matter within ten (10) business days or by such earlier date as they may agree to, then the parties may seek arbitration or any legal or equitable relief as may be available under the circumstances. Nothing in this Section shall prevent either Party from exercising any of its rights under this Section or otherwise seeking injunctive relief.

Example 12: From a LLC Operating Agreement

16.1 Dispute Resolution. If a controversy, claim or dispute arises out of, or relating to, this Agreement (as may be amended), or the interpretation or application of the tenris of this Agreement, or any breach of this Agreement (the “Dispute”), the Members agree to use their best efforts to resolve the Dispute through good faith business negotiations, which shall be a condition precedent to the institution of any mediation or litigation. The Party claiming the Dispute shall give written notice of the Dispute to each of the other Members containing sufficient detail to provide them with sufficient notice as to the Dispute. The good faith business negotiations must take place for at least 30 days after the written notice of the Dispute is provided (the “Negotiation Period”). If the Dispute is not resolved during the Negotiation Period, then the Members shall submit the Dispute to nonbinding mediation to be conducted in Ann Arbor, Michigan, by an independent qualified professional selected by mutual agreement. The fee of such professional shall be borne by the Company or equally by all Members, as agreed by the Members. If the Members cannot agree upon one independent qualified professional to mediate the Dispute within 30 days after the expiration of the Negotiation Period, then each Members shall select one independent qualified professional and the independent qualified professionals so selected shall select an alternative independent qualified professional who shall solely mediate the Dispute. The mediation shall be non-binding on the Members or the Company. Formal litigation proceedings can be commenced in a court of competent jurisdiction solely in the State of Washington by any Member if the mediation process does not result in a resolution of the Dispute as determined in the sole discretion of such Member, or if the mediation is not completed within 120 days after the expiration of the Negotiation Period.

Example 13: From a Joint Venture Agreement

Section 14.12 Arbitration of Disputes. If any dispute, controversies or differences arise between the parties hereto in connection with any provision of this Agreement, or any breach thereof, the parties shall first attempt to settle the same through friendly consultation carried out in good faith and with sincerity. In the event the dispute, controversy or difference is not so settled in the above manner, then such dispute or controversy shall be finally settled under the Commercial Arbitration Rules of the American Arbitration Association by three (3) arbitrators appointed as set forth below. The arbitration venue shall be Barcelona, Spain. Arbitration shall be conducted by a panel of three (3) members, one member selected by each of the parties and the third member selected by agreement between the other two members. Such arbitration shall be conducted in the English language. The parties’ obligations under this Article shall survive termination or expiration of this Agreement. The provisions herein shall not be construed as prohibiting any party to this Agreement from applying to any court of competent jurisdiction for such injunctive or other provisional relief as may be necessary to protect that party from irreparable harm or injury or to preserve the status quo pending resolution of a dispute or controversy. As part of the arbitration award, the prevailing party shall be entitled to recover its reasonable costs and expenses (including attorney’s fees) incurred in connection with the arbitration.

Example 14: From an Employment Agreement

Dispute Resolution. Except for enforcement of Paragraphs 6 and 7, Employee agrees to submit any dispute relating to or arising out of employment or this Agreement to the Corporation’s Dispute Resolution Program, provided that any arbitration thereunder shall be binding arbitration.

Example 15: From a Fibre Supply Agreement

7.09 Dispute Resolution.

(a) In the event of any dispute between the parties under this Agreement in respect of any matter arising under Section 1.02, 1.03, 1.04 or Section 3.01, such dispute shall be submitted to an independent forestry consultant, recognized as having expertise in the valuation of timberland assets, jointly appointed by mutual agreement of the parties (said consultant or any replacement thereof, hereinafter referred to as the “Consultant”) for resolution. In such event, the Consultant shall have thirty (30) days to resolve such dispute and the determination of the Consultant shall be final and binding on the parties. Each party shall pay one-half (1/2) of the expenses associated with the Consultant. Upon the withdrawal of the Consultant, or upon written notice by one party to the other seeking the replacement of the Consultant, Supplier and Buyer will have ten (10) days to agree upon and jointly appoint a mutually acceptable, independent forestry consultant to replace the Consultant. Any failure by the parties to reach agreement upon the appointment of the Consultant or a replacement Consultant shall be resolved in accordance with Section 7.09(b).

(b) If Supplier and Buyer are unable to agree on the appointment of a Consultant or replacement Consultant, Supplier and Buyer will each have five (5) days to appoint an independent forestry consultant. The two consultants shall in turn select a third independent forestry consultant within ten (10) days of their selection. The panel of consultants will in turn appoint an independent third party forestry consultant (which may be one of the panel members) within fifteen (15) days after their selection and the decision of the panel of consultants as to the selection of the new Consultant will be final and binding on the parties. Each party shall pay the costs of its respective consultants, if any, appointed pursuant to this Section 7.09(b) and will share equally in the costs associated with the third consultant. Notwithstanding the foregoing, if either party delivers notice seeking the replacement of the Consultant at a time when a current, unresolved dispute is pending resolution before the Consultant, the Consultant will continue to serve in its capacity hereunder with respect to such dispute until such dispute is resolved in accordance with the provisions hereof.