Arbitration agreements are now everywhere and might have signed one without even knowing it. By clicking “agree” to a software license, the party agrees to an arbitrated dispute. By agreeing to arbitrate, they wave certain rights. Understanding the pros and cons will help avoid making a mistake in jurisdiction selection.
The Importance of an Arbitration Agreement
Arbitration is a process of solving disputes outside the court. However, the procedure is similar to a court case proceedings. The party can involve lawyers, exchange information, and there will be a hearing where they present their cases and question witnesses. After the procedure, the arbitrator makes a decision. In arbitration, the process is more informal as compared to litigation.
What are the Key Components of the Agreement?
The agreement can be short to be enforced. It’s a quick blurb agreement, which is often labeled as “dispute resolution.” There will be standard arbitration clauses that bind all the disputes between the two parties and avoids the chance of going to court.
Drafting an Arbitration Agreement
It’s a confidential and private process and can be a fast and affordable dispute to a quick settlement. There are some main factors to be considered when creating an arbitration clause.
The arbitration seat
The clause specifies the location of the arbitration. The arbitration seat will determine the rules that will govern the arbitration.
The number of arbitrators
The tribunal can consist of more than three arbitrators. Both parties will have to consider whether the potential disputes justify selecting three arbitrators. The number of arbitrators can increase dispute costs, and it will take more time to coordinate the arbitrators.
The Arbitration Language
By specifying the language to be used will save a massive amount in arbitration costs in the form of translators’ fees. By not specifying the language, the arbitrator will have the chance to choose which language to use.
The Arbitration Cost
The cost will depend on the arbitrator’s fee, the length of the arbitration, and the complexity of the case. The parties will be charges for a pre-hearing conference and document reviews and the time spent. There are other administrative expenses if the parties use the American Arbitration Association. The arbitrator’s final award will also be used to pay the attorney’s fees, the judgment amount, and any other costs.
An arbitrator is a private judge, and they make a ruling that is binding on both parties. If it’s considered necessary, the decision can be ruled in a competent jurisdiction.
What is my Role at the Arbitration?
Arbitration is an informal process than conventional litigation. The parties are required to present their cases by calling the witnesses, presenting documented evidence, and arguing to persuade the arbitrator to rule on their favor.
Do I require a Lawyer?
At arbitration, the parties do not need a lawyer; however, there is an option, and it’s advisable to retain one since the procedure is adversarial in nature. The expense of retaining a lawyer is the parties’ responsibility.
A custom arbitration clause allows the parties to reduce the cost and the duration of arbitration. These are common with commodity sellers with immediate demands.