What does arbitration mean in a contract?

But first things first: An arbitration agreement is a contract in which you give up your right to bring certain claims to court. Instead, you agree that you may raise those claims only in an arbitration proceeding. Cases go to arbitration more quickly, and often cost less, than they would in court.

Can contracts always allow for arbitration?

Yes. The Supreme Court of the United States (SCOTUS) has ruled that mandatory arbitration agreements in employment contracts are legal.

Why are there arbitration clauses in most contracts?

Most contract arbitration occurs because the parties included an arbitration clause requiring them to arbitrate any disputes “arising under or related to” the contract.

When do you have to go to arbitration?

Arbitration is sometimes a preferable method of resolving a business disagreement and you may want to arbitrate your dispute. However, there are also circumstances in which you are effectively forced into arbitration because you have signed a contract with an arbitration clause.

Can a contract be set aside by an arbitrator?

It can be set aside only if a party can prove that the arbitrator was biased or that the arbitrator’s decision violated public policy. Unlike a court case, there is no automatic right to discovery (the process by which the parties have to disclose information about their cases to the other party).

When to use arbitration to resolve a dispute?

Many contracts contain a dispute resolution provision that provides that, in the event of a dispute among the parties, that dispute will be resolved by arbitration and not litigation. There are a number of reasons to use this procedure.

What happens if there is no arbitration clause in a contract?

If there is no arbitration clause included in the parties contract agreement, the parties may still agree to arbitration if they both agree to attend an arbitration session to resolve the dispute rather then having the courts make a determination What Are the Advantage and Disadvantages of an Artbitrate Clause?

Where does arbitration take place in a contract?

All claims and disputes arising under or relating to this Agreement are to be settled by binding arbitration in the state of [insert state in which parties agree to arbitrate] or another location mutually agreeable to the parties. An award of arbitration may be confirmed in a court of competent jurisdiction.

What to do if you don’t want to go to arbitration?

If you do not wish to arbitrate your dispute, you can try to argue to a judge before arbitration begins that the contract and/or the arbitration clause should not be considered valid and enforceable. However, because the courts have broadly interpreted laws in favor of arbitration, it is very difficult to get an arbitration clause overturned.