The trend toward arbitrating contractual disputes rather than litigating them in court is prompted not only by court decisions, but many businesses and their associations as well. Arbitration gives your business much greater control of the dispute resolution process and can limit its exposure to liability.
When considering whether to require arbitration of future disputes, some of the benefits to your business include:
1. Limiting, restricting or preventing class action litigation.
2. Creating a consistent time when disputes have to be raised.
3. Limiting, restricting or controlling the amount, scope and cost of discovery allowed in resolving the dispute.
4. Determining the locations where the arbitration will be conducted.
5. Controlling the scope of and ability to appeal or enforce an arbitration award.
6. Addressing the imposition of costs of the arbitration.
7. Limiting issues, claims and defenses that can be raised.
8. Creating confidentiality for the arbitration award and the claims raised.
9. Determining the scope or type of issues subject to arbitration and those that are not.
10. Providing particular opt-outs from arbitration when appropriate.
11. Identifying the arbitration service, rules and procedures to use.
12. Ensuring a neutral with business knowledge and experiences is used.
Make sure your arbitration provision is not only clear to all parties to the contract, but obvious, highlighting by bold printing or requiring the parties to initial the arbitration clause, to prevent claims that it was hidden in the fine print. All of the work in crafting a great arbitration requirement clause is lost if you cannot enforce it.
Brooks, Tarulis & Tibble, LLC has substantial experience representing clients in arbitrations and drafting and reviewing arbitration provisions. Should you want to discuss including arbitration of disputes in your business relationships, or need to evaluate arbitration requirements of vendors or customers, please contact us.