## [The most important rule when negotiating a midnight clause](/en_GB/new/most-important-rule-when-negotiating-midnight-clause)
# The most important rule when negotiating a midnight clause
Spain - 06 / 30 / 2026
Ignacio Díez-Picazo, of counsel in the Dispute Resolution, Litigation and Arbitration department of Garrigues
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**The dispute resolution clause, often relegated to the final stages of a transaction negotiation, may prove decisive in the event of a dispute between the parties. It is frequently closed in haste and without due consideration of its practical implications. It is therefore essential to pay close attention to its drafting and to approach it with the appropriate degree of rigour.**
“Sorry to bother you at midnight, Ignacio, but we are about to close a transaction and I am worried about the dispute resolution clause.”
“Well, Tirso (fictitious name), I would much rather you did this than send Lucas (the fictitious name of the junior lawyer) to search the database for a clause that looks hyper-sophisticated and overly elaborate. Or ask AI. Right, Tirso, so I can get my bearings: are we buying or selling?”
This conversation is real, save for the names (I do not know any Tirso, nor any Lucas who is or has ever been a junior lawyer), and it is very common for it to take place in the early hours when a transaction is about to close.
Drafting an excellent M&A agreement with a poor dispute resolution clause (poor, that is, for our client) is something those of us who practise litigation and arbitration come across all too often, and it drives us mad. Contracts must also be designed —perhaps above all— for disagreements. If we were certain that no dispute would ever arise between the parties, an oral agreement sealed with a handshake would suffice, even for the purchase or sale of a nuclear power plant or an Ibex 35 company. I exaggerate, but only slightly: a contract is worth something to a client only if its dispute resolution clause is worth something.
The dispute resolution clause is known as the *midnight clause* because, all too often, it is agreed in the small hours, at closing, with little negotiation and without awareness of its implications. It is the last clause in many contracts. Sometimes it climbs a few places and becomes the penultimate or antepenultimate clause, because it manages to relegate the anti-money laundering or data protection clause to last place. Obviously, what matters is not where it appears, but what it says. Yet it has always been said that its location says a great deal about the importance attached to it. A basic rule of systematic interpretation, dear Tirso.
Litigators spend their lives trying to make our colleagues and in-house lawyers understand the importance of *our* clause. We understand that it is difficult to talk about divorce while you are getting married. But failing to do so can be lethal for the client. Fully grasping this is a giant step forward for transactional lawyers. Educating others about it is an imperative for litigators.
If the foregoing had to be distilled into a single rule, expressed in a single word, that litigators long to embed in the minds, souls and even hearts of the external and internal lawyers handling transactions of every kind, that one-word rule would be: “Ask”. Any synonym or similar term will also do: consult, enquire, seek advice, request, plead, demand, require. Just as you seek tax, employment or competition law advice, among many other areas, do the same for dispute resolution. And if it is midnight or the early hours, so be it; nothing necessarily follows. A fifteen-minute phone call may not get you to heaven, but it will almost certainly keep you (and us) out of hell. It is a one-article statute: ask the litigation team.
[**CONTINUE READING HERE**](https://www.garrigues.com/sites/default/files/noticias/files/the-most-important-rule-when-negotiating-a-midnight-clause.pdf)**.**
[Litigation and Arbitration](/en_GB/tags/litigation-and-arbitration), [Spain](/en_GB/tags/spain)
### Contact
[Ignacio Díez-Picazo](/en_GB/team/ignacio-diez-picazo-gimenez)
[Contact]()
- +34 91 514 52 00
[Madrid](https://www.garrigues.com/en_GB/office/madrid)
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- [Dispute Resolution: Litigation and Arbitration ](/en_GB/services/dispute-resolution-litigation-and-arbitration)
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