Litigation & Disputes
Arbitration Agreement
Requires parties to resolve disputes through binding arbitration rather than litigation, specifying the rules and procedures to be followed.
Overview
Requires parties to resolve disputes through binding arbitration rather than litigation, specifying the rules and procedures to be followed.
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Who Needs This Document?
Businesses wanting to avoid costly litigation, employers, consumer-facing companies, and parties in international commercial transactions.
When Do You Need This?
Typically included as a clause in commercial contracts, employment agreements, or consumer agreements. Can also be a standalone agreement after a dispute arises.
Key Provisions
A well-drafted document should include the following essential provisions:
- Scope of disputes subject to arbitration
- Selection of arbitration institution and rules
- Number of arbitrators and selection procedures
- Governing law, seat of arbitration, and language
Frequently Asked Questions
- What do parties give up by agreeing to arbitration instead of litigation?
- Arbitration typically limits the right to a jury trial and significantly narrows the grounds for appealing an unfavorable decision compared to a court judgment. In exchange, parties usually get a faster, more private process with more control over selecting the decision-maker, which is why arbitration clauses are common in commercial and employment contracts despite the reduced appeal rights.
- How is the arbitration institution and rule set typically chosen?
- The arbitration clause specifies which institution's rules will govern the proceeding and the process for selecting arbitrators, decided at the time the contract is drafted rather than after a dispute has already arisen. Choosing this in advance avoids a secondary fight over procedure once the parties are already in conflict and less likely to agree on anything.
- Why do some arbitration agreements call for three arbitrators instead of one?
- A three-arbitrator panel, often with each side selecting one arbitrator and those two agreeing on a third, is generally used for higher-value or more complex disputes where the added cost is justified by reducing the risk of a single arbitrator's decision being an outlier. Single-arbitrator proceedings are faster and cheaper, making them more common for smaller or more straightforward disputes.
Related Documents
- Settlement AgreementResolves a dispute between parties without going to trial, specifying the agreed-upon terms including payments, releases, and confidentiality.
- Service AgreementA comprehensive contract governing the provision of services between a service provider and a client, including SLAs, payment terms, and liability.
- Employment ContractA comprehensive agreement between employer and employee defining the terms of employment including compensation, benefits, duties, and conditions.