(Predispute Arbitration Clauses in Contracts)
The importance of predispute arbitration clauses. Upon entering into any written agreement, and for an attorney who drafts or reviews any written agreement, including an arbitration clause whenever appropriate is of critical importance. Experience shows that without a predispute arbitration clause, no matter how favorably both parties may view arbitration generally, once a dispute arises the prospective defendant is usually content with the status quo and adopts an uncooperative ("I did nothing wrong") attitude. A party negotiating an agreement can control its litigational destinies by including a predispute arbitration clause, which requires dispute resolution by arbitration and pre-selects the forum and the procedures for resolving future disputes.
Drafting arbitration clauses. To be effective, an arbitration clause must ensure an efficient procedural processing and provide for the selection of an appropriate arbitrator. Therefore, the arbitration clause must either designate a specific arbitration organization (and thereby incorporate the rules and arbitrator selection method of that organization) or it must set forth in the arbitration clause detailed rules on such matters as how the arbitration is to be initiated, the selection, qualifications and compensation of the arbitrator, discovery, determining the date and site of the hearing, pre-hearing and hearing procedures, and dealing with an uncooperative party.
The following are sample arbitration clauses:
Basic Arbitration/Mediation Clause
Basic Arbitration/Mediation Clause (naming ASP and AAA)
Lease Agreement: Arbitration Clause
Construction Contract: Arbitration Clause
Employment Agreement (with arbitration clause)
Option to Arbitrate
Attorney Fees Provision (that includes arbitration proceedings)