Arbitration Provisions

Your instincts are telling you that a business agreement is faltering. Now what?

In addition to asking why there's a break down and considering the contract's term and termination provisions, you need to figure out if your governing document has an arbitration clause.

Does it specify where you can sue—state or federal court, or a specific location—or does it mandate arbitration with a private entity?

Traditionally, arbitration was seen as a quicker, cheaper alternative to court. But today, it often involves lengthy discovery processes, extensive hearings, and high-demand arbitrators, making it neither fast nor cheap.

Here are key points to consider when reviewing, drafting, or negotiating these clauses:

👩🏻‍⚖️ Who oversees the arbitration? Options include organizations like the AAA or JAMS, or a local attorney.

👩🏻‍⚖️ What rules apply? Determine if specific arbitration rules or state/federal civil procedures are in play.

👩🏻‍⚖️ Is the arbitrator’s decision final? Check if it’s final or subject to appeal, and where appeals can be made.

👩🏻‍⚖️ What claims are covered? Decide if all disputes or only certain claims are subject to arbitration.

👩🏻‍⚖️ Who will arbitrate? Identify if there’s a single arbitrator or a panel, and how they’re selected.

👩🏻‍⚖️ Who pays? Clarify cost responsibilities—shared or loser pays?

👩🏻‍⚖️ Is arbitration enforceable in your state? Ensure your clause is legally sound across relevant jurisdictions.

Arbitration clauses aren’t one-size-fits-all. Tailor them to your contract’s needs and your business goals for an effective dispute resolution strategy.

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