This clause allocates financial responsibility for resolving disputes that arise from force majeure events—unforeseen circumstances beyond either party's control, such as natural disasters, pandemics, wars, or government actions. The clause typically specifies who pays for arbitration, mediation, litigation costs, and expert fees when a force majeure event triggers a contractual disagreement. This matters because force majeure disputes are often complex, expensive, and emotionally charged; without clear cost allocation, parties may face unexpected financial burdens on top of losses already incurred from the triggering event itself. The clause protects parties by establishing predictability around dispute expenses during already-difficult circumstances.
When negotiating this clause, seek a "shared cost" or "each party bears its own" approach rather than accepting full cost responsibility, since force majeure events are by definition unforeseeable and neither party caused them. Ensure the clause clearly defines which costs are covered (attorney fees, expert witnesses, arbitrator fees, etc.) and includes a threshold—for example, costs above a certain amount trigger cost-sharing rather than one party bearing all expenses. Consider adding language that suspends or tolls dispute resolution timelines during the force majeure event itself, preventing you from incurring costs while unable to participate meaningfully.
Frequently Asked Questions
What does this clause mean in simple terms?
This clause allocates financial responsibility for resolving disputes that arise from force majeure events—unforeseen circumstances beyond either party's control, such as natural disasters, pandemics, wars, or government actions.
Why should I care about this clause?
The clause typically specifies who pays for arbitration, mediation, litigation costs, and expert fees when a force majeure event triggers a contractual disagreement.
What are my options?
This matters because force majeure disputes are often complex, expensive, and emotionally charged; without clear cost allocation, parties may face unexpected financial burdens on top of losses already incurred from the triggering event itself.
How does this affect small businesses?
The clause protects parties by establishing predictability around dispute expenses during already-difficult circumstances.