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Guidelines on How to Draft an Effective Arbitration Agreement

By Edited Oct 2, 2015 0 0

Disputes and conflicts arise in different settings such as work and business relationships. When this happens, both parties should have a clear way to solve it. To address this problem, the two parties may sign an arbitration agreement when they sign their employment or business contract. But what exactly is an arbitration agreement?

An arbitration agreement is an agreement which states that the participating parties should use the arbitration process in case a conflict or dispute arises. While this may seem pretty simple, it actually isn't. If you want to include such a clause in your contract, you should take note of a few guidelines such as:

  • The arbitration clause should be simple. In order for the other party to easily understand what you are intending to do, keep it as simple as you can. Refrain from using complicated and technical words that he may not understand.
  • Include possible expenses in an arbitration proceeding. One of the things you need to do in presenting an arbitration agreement is to prove why it is better than civil court hearings.
  • Present the requirements for getting an arbitrator. While arbitrators are not necessarily judges, they should still possess high-caliber knowledge and skills in handling disputes and conflicts between contracting parties.
  • In what ways can parties present evidence? In arbitration, there should be a guide on how both parties can show evidence. For instance, parties can only present evidence by showing records or conducting interviews.
  • Clarify whether parties can make appeals on the decision or not. While the decisions in an arbitration process are often binding, there may also be some exceptions.
  • Explain how compensation is calculated. Like court cases, the arbitration proceeding also aims to provide the necessary benefits or compensation to the damaged party or individual.
  • Suggest undergoing mediation instead. Mediation is another alternative way to resolve disputes. However, what participants would present in a mediation proceeding are not pieces of evidence, but resolution proposals.

Drafting an arbitration clause is not easy. You will have to deal with every detail so the other party would not have any questions or objections. But if you think of it, arbitration is indeed a more convenient way to resolve a dispute once it arises. You would not need to file formal complaints to a civil or federal court because you already have an alternative way to fix the issue. If you want to draft the perfect arbitration agreement for your contract, you can ask help from a Los Angeles employment attorney.



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