Arbitration Agreement
[ State ]
WHEREAS, [ Name of Company or Person: FirstName, Person: LastName ] (“First Party”) and [ Name of Company or Person: FirstName, Person: LastName ] (“Second Party”) entered into a [ type of contract ] on [ Date ] relating to [ Briefly describe the Contract ] (“Contract”);
WHEREAS, pursuant to the Contract, a dispute has arisen between the Parties which they have been unable to resolve through mutual negotiation (“Dispute”);
WHEREAS, the Parties have mutually agreed to refer the dispute to arbitration for settlement and now enter into this Arbitration Agreement (“Agreement”) for the purpose of stating the terms of reference for the arbitration.
NOW, THEREFORE, in consideration of the mutual covenants and promises made by the Parties hereto, they covenant and agree with each other as follows:
1. Relationship Between Parties
The Parties are independent to one another and nothing in this Agreement shall create any relationship which could be construed as employment, partnership, joint venture, agency or distributor between them.
2. Basis of the Arbitration
The parties Agree that: (a) the arbitration shall be conducted pursuant to the Commercial Arbitration Rules of the American Arbitration Association (“Rules”); (b) the Rules are deemed incorporated into this Agreement by reference; and (c) the Arbitration shall be conducted on a confidential basis and no matter relating to it shall be disclosed by the Parties to any persons or entities without the express written consent of the other Party, including the findings and awards made by the Arbitrator. A breach of the duty of confidentiality prior to the Arbitrator’s findings will entitle the injured Party to terminate this Agreement.
3. Mutually Agreed Facts
The facts of the Dispute as mutually agreed between the Parties are (“Agreed Facts”) [ describe the facts the Parties agree on in detail and clearly ].
4. Additional Facts of the First Party
The First Party adds the following additional claims and remarks to the Agreed Facts and which additional claims are disputed by the Second Party: (a) [ First Party to add details ]; (b) .
5. Additional Facts of the Second Party
The Second Party adds the following additional claims and remarks to the Agreed Facts and which additional claims are disputed by the First Party: (a) [ Second Party to add details ]: (b) .
6. The Arbitrator
The Parties mutually agree that the following shall act as the sole arbitrator of the Dispute:
Arbitrator Name: [Arbitrator.Name] (“Arbitrator”)
Arbitrator Address: [Arbitrator.Street], [Arbitrator.City], [Arbitrator.State], [Arbitrator.Zip]
Arbitrator Phone: [Arbitrator.Phone]
The Parties confirm that: (a) the Arbitrator is a person independent to them and they have not previously had any dealings with the Arbitrator, directly or indirectly: and (b) the Arbitrator has consented in writing to be appointed in such capacity.
7. No Third Parties
With the exception of any witnesses that the Arbitrator my require to interview, in person (including video) or by written statement, no other Party shall be a part of or included in the Arbitration proceedings unless the Parties consent in writing.
8. Terms Of Reference
The terms of reference (“Terms”) mutually agreed by the Parties for the Arbitration and the Arbitrator are (a) the Arbitration shall be conducted in [ City ], [ State ]; (b) the Arbitration shall be conducted according to Federal laws and the laws of the State of [ State ]; (c) the proceedings may be in person, in writing or by video as the circumstances require or allow; (d) the Arbitrator shall resolve the Dispute based solely on the facts stated by the Parties and such other facts Arbitrator secures directly related to the Dispute; (e) the findings of the Arbitrator shall be consistent with the intent of the Parties for the disputed Contract; (f) the Arbitrator shall not make any interpretations or conclusions of the law but shall use the law for guidance for the purpose of finding a settlement to the dispute; (g) the Arbitrator shall not have any ex parte contacts with the Parties and, except with consent of the Parties, witnesses outside of the Arbitration proceedings; (h) the Arbitrator shall not have the power to alter the terms of the Contract or any part thereof; (i) in giving the findings, the Arbitrator shall give an explanation of the findings and any award and the effects of the findings and award on the Parties; and (j) where there is any conflict between Federal and State laws, the Arbitrator shall give priority to Federal law.
9. Pre-Hearing Conference
The Arbitrator shall hold a pre-hearing conference(s) for the purpose of collecting additional facts or for seeking clarifications from the Parties and the Parties agree to attend such conference(s). The pre-hearing conference(s) may be conducted in person, in writing or by video and Parties must be given a written notice of not less than 14 days. The Arbitrator may only raise matters directly related to the Dispute. If a Party disputes a matter raised at a pre-hearing conference, the Arbitrator may make a ruling on it.
10. Waiver to Jury Trial
The Parties expressly agree to waive their right to a Jury Trial in respect of the Dispute. This Clause shall not apply, if at the execution of this Agreement: (a) A Party was aware of material facts to the Dispute and such facts were not disclosed to the other Party; and (b) to any material facts which were reasonably unknown to both the Parties and there was no reasonable means for them to discover such.
11. The Hearing
The Hearing shall take place in [ City ], [ State ] as agreed between both the Parties and shall take place not later than [ Days from the Effective Date]. The Parties and/or their legal representatives shall attend the Hearing.
12. Findings of the Arbitrator
The Parties expressly agree that the findings of the Arbitrator shall be binding and enforceable on them for all purposes and they agree to be bound by such findings. Each Party enters into this Agreement solely on the promise and consideration of the other Party to be so bound by the decision of the Arbitrator. Any award made by the Arbitrator shall be settled by the relevant Party within [ number of days ].
13. Entire Agreement
This Agreement set out the entire agreement and understanding between the Parties relating to the subject matter of this Agreement, and there are no other conditions, promises, representations or undertakings between them, whether oral or written.
14. Severability and Invalidation
The Parties agree that (a) if any provision of this Agreement is be determined to be invalid or unenforceable for any reason, the remaining provisions shall be unaffected and shall continue to be valid and enforceable; and (b) a failure by one or both Parties to uphold any term of the Agreement shall not constitute a waiver or cancellation of any other terms of the Agreement or the Agreement itself.
15. Duration
This Agreement continues in full force and effect: (a) for so long as the Contract subsists; (b) settlement of the Dispute between the Parties; or (c) the findings and award of the Arbitrator.
16. Amendment
This Agreement may only be amended by mutual agreement of the Parties in writing.
17. Waivers
A waiver of a breach of any term of this Agreement or of a default by any Party shall not constitute or be deemed to be a waiver of any other breach or default that may already have occurred, or which may occur. Unless consideration has been received, any such waiver shall not preclude the Party making the waiver from subsequently requiring compliance with the waived obligation or default.
18. Delays, Indulgences And Omissions
A delay or indulgence or omission in exercising any right, power or remedy shall not be construed as a waiver.
19. Notices
Any notice pursuant to this Agreement shall be in writing and may be sent by: (a) regular mail to the other Party at the address stated in this Agreement and shall be effective 2 days from the date of dispatch; or (b) if permitted in the jurisdiction, by email or other means of written/printed digital means of communication and such notice shall be deemed to be effective 24 hours after dispatch.
20. Successors
The provisions of this Agreement shall be binding on and inure for the benefit of the Parties and their respective successors and assigns and legal representatives.
21. Costs
The parties agree that they shall: (a) each bear the cost of their own Attorney; (b) the cost of the court reporter, if they request for one; and (c) all other costs of the Arbitration shall be shared equally between them.
22. Sanctions
The Arbitrator may impose sanctions against either any of the Parties or their representatives if they fail to comply with any terms and conditions of this Agreement.
23. Applicable Law
This Agreement and the interpretation of its terms shall be governed by and construed in accordance with Federal laws and the laws of the State of [ State ] and subject to the exclusive jurisdiction of the federal and state courts located in [ County ], [ State ]. In cases of conflict between Federal and State laws, Federal laws shall prevail.
IN WITNESS WHEREOF, each of the Parties has executed this Agreement by both Parties personally or by their duly authorized officer (as appropriate), as of the day and year set forth below.
User Notes: (a) The decision to limit the resolution of contractual disputes to Arbitration is an important as it implies the waiver of the constitutional right to a trial by jury and this template expressly provides for that. Users should carefully consider whether they are willing to contract way that right. On the positive side is that, if a dispute arises between the Parties, Arbitration will likely ensure that legal costs to the settle the dispute will be significantly lower than court proceedings. It is also likely that the dispute will be resolved more quickly; (b) statements of the facts of the dispute should be stated as clearly as possible. User should attempt to adopt an objective view of matters when writing their statements: (c) the Parties should attempt to agree on as many relevant facts as possible to narrow the scope of the dispute. This will help to speed up the arbitration process and minimize costs; (d) Users should attempt to get an indication from the Arbitrator on a possible date for the hearing before fixing a time by which it must be held. This may assist to avoid having to change the terms of the Arbitration Agreement; (e) this template states that costs of the Arbitration should be shared between the Parties. If this is not the case, the relevant section should be adjusted to reflect the desired arrangement; and (e) In situations where there is a conflict between Federal and State laws, this Agreement provides the Federal law prevails. If the User prefers otherwise, the relevant provisions should be amended.
The User Notes are intended for guidance only and do not in any way constitute legal advice and Users should treat them accordingly.
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Create & signWhat's an arbitration agreement?
An arbitration agreement is a legal contract between parties involved in a business dispute where they agree to resolve any disagreements through arbitration rather than going to court. In this agreement, both parties consent to have an appointed arbitrator, typically an impartial third party, hear their case and make a binding decision.
This process is often faster, more flexible, and less costly than traditional court proceedings, making it an attractive alternative for resolving disputes.
What details should you include in an arbitration agreement?
When drafting an arbitration agreement, it's essential to include the following key details:
- Parties Involved: Identify the names and contact information of the parties agreeing. This ensures clarity regarding who is bound by the terms of arbitration.
- Arbitration Process: Specify the conditions required for arbitration, such as how arbitrators will be selected (e.g., mutually agreed upon, appointed by a specific organization), which arbitration rules will govern the process (e.g., AAA, JAMS), and any particular terms or procedures agreed upon by the parties.
- Location: Determine the location or jurisdiction where the arbitration proceedings will occur. This helps establish the legal framework and logistical arrangements for the arbitration process.
- Commencement and Duration: Define the timeframe for initiating arbitration proceedings and outline the expected duration for the arbitration process. This includes setting deadlines for submitting claims, responding to claims, conducting hearings, and issuing the final decision.
What is arbitration?
Arbitration is an alternative avenue for resolving disputes, employing impartial arbitrators rather than traditional court proceedings.
It's often favored due to its ability to circumvent the expenses, delays, and contentious nature usually associated with litigation in court. While courts have long been the go-to method for resolving legal conflicts, the rise of alternative dispute resolution methods, such as arbitration, has gained traction.
As a form of ADR (Alternative Dispute Resolution), arbitration offers parties a more streamlined and efficient means of addressing disagreements, fostering a more cooperative and expeditious resolution process.
Who can use arbitration in a dispute?
Anyone can agree to arbitrate a disagreement or legal issue. However, arbitration cannot occur unless both parties agree to it. Just because one party prefers arbitration does not mean the other party loses its right to take a dispute to court.
Many contracts include a clause in which the parties agree to proceed with arbitration in case of a dispute. By signing the agreement, both parties agree to abandon their right to go to court and arbitrate instead.
Mandatory arbitration
For some types of disputes, arbitration is mandatory. This means the parties must settle their dispute through arbitration and do not have the option of going to court.
For example, labor disputes in the US must be settled by arbitration. Whether or not arbitration is mandatory will depend upon the nature of the dispute and the jurisdiction in which it arises.
The difference between arbitration and mediation
Arbitration is often confused with mediation. Mediation is another form of ADR in which a third party goes between the disputing parties to help them settle a dispute. However, unlike arbitration, the mediator does not hear any evidence, and the mediation process is not binding on the parties. The parties can walk away from a mediation without settling—the mediator cannot force one on them.
Arbitration versus litigation
Comparisons between arbitration and traditional litigation (or court proceedings) are common. Parties often see arbitration as the less expensive way of resolving a dispute. But that's not always so. An arbitrator's time and expenses can be costly. A small claims court can be faster and less expensive than arbitration for a minor legal issue that doesn't involve a considerable amount of money.
The benefits of arbitration over litigation
However, arbitration does have its benefits. There are essential differences between arbitrators and judges, for example. In a court case, the parties have no choice over the judge who will hear their dispute. By contrast, the parties have some say in the selection of arbitrators. And they can make sure the arbitrator is an expert in the dispute.
A big plus of arbitration is that most proceedings are separate from the public record. Unlike court proceedings, which are always public. This can be valuable for a party wishing to keep the dispute details private.
Which laws govern arbitration?
In many circumstances, a contract will specify the rules and procedures for a dispute.
There are many outside (third-party) arbitration services specializing in specific areas. Contracts often state that these services will handle the arbitration and that the service's rules and procedures will apply. These could be the rules of the American Arbitration Association, the International Chamber of Commerce Arbitration Rules, the London Court of International Arbitration Rules, or the Independent Film and Television Alliance Arbitration Rules, to name just a few.
Due to the variety of arbitration services and the flexibility parties have in drawing up their rules, no single set of rules or procedures applies to all arbitrations.
Rules of arbitration
No matter which set of rules the parties choose, there are some key issues typically addressed in arbitration rules:
- Number of arbitrators—The parties usually outline in the contract whether one arbitrator or a panel of three or more will decide their dispute. Generally, more complicated and significant issues will involve several arbitrators.
- How the arbitrators will be chosen—Parties can appoint arbitrators in several ways. These include by agreement, selecting from a list of arbitrators, or by a process of elimination.
- Timelines—Rules can establish timelines for resolving a dispute, including when notices should be provided, how long hearings will last, etc.
- Evidence—The rules of evidence are very complex in ordinary court proceedings. They are generally more relaxed in arbitrations. Arbitrators can consider more evidence, for example. However, there can be less time to present and discover evidence in an arbitration.
- Awards—The rules often specify the form an award can take and any decision deadlines.
- Confidentiality and records—Rules may allow parties to receive and keep records of the proceedings and to keep records entirely confidential.
The rules of arbitration can vary widely. Therefore, parties should refer to their contract or the specified rules to determine the precise rules of their dispute.
How to commence arbitration
Arbitrations can take many forms. However, they typically begin with the complaining party sending the opposing party a notice of intention to arbitrate a dispute. In this notice, the party outlines the basis and nature of the dispute. After that, there is a period in which the opposing party must respond. This is followed by the selection of arbitrators and then the hearing itself.
What happens during arbitration
In many ways, the process is the same as a courtroom trial. For example, evidence is presented, arguments are made, witnesses are called and questioned by the parties, and so forth. However, in arbitration, these aspects are often simplified or limited to make for a faster process than the typical court proceeding.
After the hearing, the arbitrator(s) deliver a ruling to the parties within a specific period. Depending on the type of arbitration, the ruling may be final, or there may be options to appeal.
How popular is arbitration?
Labor, construction, and securities regulation have long used arbitration to resolve disputes. However, arbitration is becoming popular in other disputes. It is increasingly used in employment, business, and other venues.
Contractbook simplifies the process of creating arbitration agreements by providing customizable templates tailored to your needs. With Contractbook, you can easily input critical details such as the parties involved, arbitration conditions, location, and period for the proceedings. The platform streamlines the entire process, ensuring that your arbitration agreement is comprehensive, legally sound, and ready for use in no time.
Plus, Contractbook's intuitive interface makes it easy to collaborate with other parties and manage all your contracts in one centralized location, saving you time and reducing the risk of errors.
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