The Study of Negotiation Clause in Settlement of Commercial Disputes by Considering International Legal Practice

In commercial contracts, the parties usually agree to settle their disputes through amicable negotiations prior to refereeing them to arbitration or judiciary and hereby they will be achieved a settlement by maintaining their commercial relations with the lowest cost, time and damages. Although these agreements are very prevalent in commerce, their legal status, especially in respect of obligations of the parties and legal consequences of their breach, has not thoroughly been discussed. In this research paper, the legal status of these agreements will be first studied as an obligation on the parties to negotiate before refereeing their disputes to arbitration or judiciary. Based on such agreements, the parties are banned from referring their disputes to arbitration or judiciary before they first try to settle their disputes via amicable negotiations on a bona fide basis and on an organized manner. The breach of this obligation would also lead to a contractual liability.