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A business contract, lease or other written contract may contain an arbitration
clause. By using such a clause, the parties to the contract agree to arbitrate
any future disputes. As with any clause, all parties must agree to it's
use in the contract before the contract is signed. The following arbitration
clause language may be modified to suit the needs of the parties or used
"as is" in order to utilize the services of an affiliated United
States Arbitration & Mediation office, if arbitration is ever needed.
SAMPLE ARBITRATION CLAUSE:
In the event a dispute shall arise between the parties to this [contract,
lease, etc.], it is hereby agreed that the dispute shall be referred to
[one of the following choices: (1)designate a specific USA&M office
or alternate service by agreement of the parties; (2) provide a method of
selecting the arbitrator and situs of the hearing, such as "from the
county wherein the manufacturing plant is located"; or for multi-jurisdictional
disputes (3) insert "a USA&M office to be designated by USA&M
National Headquarters"] for arbitration in accordance with the applicable
United States Arbitration and Mediation Rules of Arbitration. The arbitrator's
decision shall be final and legally binding and judgment may be entered
thereon.
Each party shall be responsible for its share of the arbitration fees
in accordance with the applicable Rules of Arbitration. In the event
a party fails to proceed with arbitration, unsuccessfully challenges the
arbitrator's award, or fails to comply with the arbitrator's award, the
other party is entitled to costs of suit, including a reasonable attorney's
fee for having to compel arbitration or defend or enforce the award.
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It is also recommended that contracts containing arbitration clauses,
particularly those involving employment relationships, contain the following
language, in boldface print above the signature lines:
THIS CONTRACT CONTAINS A BINDING ARBITRATION
PROVISION WHICH AFFECTS YOUR LEGAL RIGHTS AND MAY BE ENFORCED BY THE PARTIES.
Other Considerations:
1) Fees--USA&M Arbitration Rules set forth how arbitration
fees are to be paid. Alternative fee-paying arrangements may be created
by the parties in their arbitration clause, subject to acceptance by USA&M.
2) Number of Arbitrators--USA&M Rules of Arbitration state
that unless the parties agree otherwise, one arbitrator is to be assigned
to a case. In their arbitration clause, parties may specify a different
number of arbitrators (usually three) to hear their case.
3) Attorney's Fees--In most states, an arbitrator may not award
attorney's fees unless a statute or the parties' arbitration clause specifically
provides for such an award.
4) Mediation--USA&M strongly suggests that the parties mediate
prior to arbitrating. Mediation can save time and money, by either resolving
the matter or narrowing the issues to be arbitrated. The arbitration administrative
fee will be waived if parties agree to mediate with USA&M prior to arbitrating.
A mediation first, arbitration second clause can be used to require that
mediation take place prior to arbitration.
5) Assistance--Upon request, USA&M will help the parties customize
a mediation/arbitration provision to fit their particular needs.
6) Internal Appeal--The USA&M Internal Appeal Procedure applies
only when the parties specifically agree to it in their contract to arbitrate.
The right to an Internal Appeal does not apply unless the parties specifically
agree that it will.
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