An arbitration clause is a clause in a contract that states that the parties will pursue arbitration in case of a breach of the agreement. This arbitration can take place after good-faith negotiations between the parties have failed or can be mandatory immediately upon any breach. Many businesses like to include arbitration clauses in their contracts because it simplifies the process of rectifying a breach. Arbitration can be cheaper and more expedient than litigating the breach in court and for contracts between international parties, pursuing arbitration can be a fairer means of settling a dispute than resorting to local courts.