This arbitration agreement is between
The Claimant has a claim against the Respondent arising out of a dispute over
The parties have decided to refer to and finally resolve the Dispute through arbitration under the applicable rules (the "Rules") of the
This agreement is intended to serve as the parties' submission of the Dispute to arbitration and sets forth the terms on which the arbitration will be conducted.
The parties therefore agree as follows:
1. SUBMITTAL TO ARBITRATION.
The parties shall not litigate their Dispute. The Dispute shall be determined finally by binding arbitration conducted before the Arbitrator described below under the provisions set forth in this agreement (the "Arbitration"). The parties will abide by and perform any ruling, judgment, or award issued by the Arbitrator, and any court having jurisdiction may enter judgment on the award.
2. INITIATION OF ARBITRATION.
To initiate the arbitration process, the Claimant must file a written claim with the governing authority. Claims can be filed at the office of
3. ARBITRATOR.
(a) each party shall appoint an Arbitrator, and these two appointed Arbitrators shall appoint a third Arbitrator, who shall act as chairman of the tribunal; (b) if either party fails to appoint an Arbitrator within days of receipt of notice of the appointment of an Arbitrator by the other party, such Arbitrator shall at the written request of either party be appointed by ; (c) if the two Arbitrators to be appointed by the parties fail to agree on a third Arbitrator within days of the appointment of the second Arbitrator, the third Arbitrator shall be appointed at the written request of either party by ; (d) if a vacancy arises because any Arbitrator dies, resigns, refuses to act, or becomes incapable of performing his or her duties, the vacancy shall be filled by the method by which that Arbitrator was originally appointed.
4. HEARING.
The place of Arbitration shall be
5. APPLICABLE LAW AND RULES.
- (a) Applicable Law. The agreement shall be governed by and interpreted in accordance with the laws of
. Judgment on the award rendered by the Arbitrator s may be entered by any court having jurisdiction thereof. The Arbitrators shall determine the Dispute in accordance with the substantive law of the state of, exclusive of its conflict-of-law rules. - (b) Arbitration Rules. The Arbitration shall be conducted in accordance with the Rules. In the event of a conflict between this agreement and the Rules, this agreement shall govern. The rules applicable to attorney-client and work-product privileges, and to settlement offers, will be honored in the Arbitration as though the case were being determined in a
state or federal court. - (c) Familiarity with Rules. The parties hereby state that they have read the procedures and are familiar with the Rules relating to arbitration.
7. DISCOVERY.
8. CONDUCT OF HEARING.
- (a) Management of Proceedings. The Arbitrator
s shall manage the proceedings ashe or she they deems appropriate so as to make the Arbitrators expeditious, economical, and less burdensome than litigation. - (b) Powers. The Arbitrator
s may:- (i) Award any relief that could be awarded by a
court; - (ii) Hear and decide the Dispute on the evidence presented even if a party notified of the date and time of the Hearing fails to appear;
- (iii) To provide for speed and efficiency,
- A. limit issues and discovery to focus on the core of the Dispute,
- B. limit the time allotted to each party for presentation of its case, and
- C. exclude testimony and other evidence
it they deems irrelevant, cumulative, or inadmissible; and
- (iv) In the course of the proceedings, order any provisional or equitable remedy, including preliminary or mandatory injunction, that
it they deems just and equitable.
- (i) Award any relief that could be awarded by a
- (c) Oath Required. All testimony shall be presented under oath or affirmation.
- (d) Right to Counsel. Each party shall have the right to be represented by counsel at any Arbitration covered by this agreement.
- (e) Subpoenas. Each party and the Arbitrator
s shall be entitled to subpoena witnesses for attendance at the Hearing and for the production of records. All provisions of applicable state or federal rules of civil procedure relating to fees and expenses of witnesses shall be equally applicable in this Arbitration. - (f) Unavailable Witnesses. Use of depositions of witnesses who cannot be subpoenaed or are unable to attend the Hearing will be permitted to the extent permitted by applicable state or federal rules of civil procedure.
- (g) Deadlines. When an event is to be completed by a specific date, it must be completed by 5:00 p.m. on that date.
- (h) Copies. A party providing any document to the other party shall also provide a copy to the Arbitrator
s . (i) No Record. There will be no stenographic record of the Hearing. (i) Record of Proceedings. Either party may, at its expense, have the Hearing transcribed. The recording party shall provide a copy of any prepared transcript to the Arbitrator s .
9. AWARD.
- (a) Form of Award.
The award will be a reasoned award, and will be issued in writing and signed by the Arbitrator s within days of the conclusion of the Hearing . The Arbitrator s may make specific findings of fact or law. The award will be based on the evidence presented and the law argued by the parties. The award will be a decision only, without opinion or reasoning and if in favor of the Claimant, shall specify only the amount of damages awarded. - (b) Timing.
The award shall be rendered within months of the commencement of the Arbitration, unless this time limit is extended by the Arbitrator s . Barring extraordinary circumstances, Arbitration proceedings will be concluded within days from the date the Arbitrator s are is appointed. The arbitral tribunal may extend this time limit in the interests of justice. Failure to adhere to this time limit shall not constitute a basis for challenging the award. - (c) Written Statement. Before rendering the final award, the Arbitrator
s shall submit to the parties an unsigned draft of the proposed award. Withinbusiness days after receiving this draft, a party may serve on the other party and file with the Arbitrator s a written statement outlining any claimed errors of fact, law, computation, or other ("Written Statement"). Withinbusiness days after receipt of the Written Statement of each party, the Arbitrator s shall renderits their final award. - (d) Damages.
The Arbitrator s is are not empowered to award punitive or other damages not measured by the prevailing party's actual damages, except as may be required by statute. Each party hereby irrevocably waives any right to recover damages with respect to the Dispute. The Arbitrator s is are empowered to award punitive damages in excess of compensatory damages. If punitive damages are awarded, the Arbitrator s will separately state those damages and set forth the factual and legal basis for that portion of the award. However, in no event may a punitive damage award exceed . - (e)
Costs. In the final award, the Arbitrator s will split the costs of the Arbitration evenly between the parties or as the Arbitrators deem Arbitrator deems just and equitable. Fees. In the final award, the Arbitrator s is are authorized and encouraged to award, as it they deem deems fair and just, to the Party deemed by the Arbitrator s to be the prevailing party, that party's costs and fees. "Costs and fees" means all reasonable pre-award expenses of the Arbitration, including the Arbitrator 's s' fees, administrative fees, travel expenses, out-of-pocket expenses such as copying and telephone, court costs, witness fees, and attorneys' fees.
11. CONSIDERATION.
In addition to any other consideration, each party's promise to resolve the Dispute by Arbitration in accordance with the provisions of this agreement, rather than through the courts or other bodies, is consideration for the other party's promise.
12. EXCLUSION OF LIABILITY.
The Arbitrator
13. AMENDMENTS.
No amendment to this agreement will be effective unless it is in writing and signed by a party or its authorized representative.
14. ASSIGNMENT AND DELEGATION.
- (a) No Assignment. Neither party may assign any of its rights under this agreement, except with the prior written consent of the other party. All voluntary assignments of rights are limited by this subsection.
- (b) No Delegation. Neither party may delegate any performance under this agreement, except with the prior written consent of the other party.
- (c) Enforceability of an Assignment or Delegation. If a purported assignment or purported delegation is made in violation of this section, it is void.
15. COUNTERPARTS; ELECTRONIC SIGNATURES.
- (a) Counterparts. The parties may execute this agreement in any number of counterparts, each of which is an original but all of which constitute one and the same instrument.
- (b) Electronic Signatures. This agreement, agreements ancillary to this agreement,and related documents entered into in connection with this agreement are signed when a party's signature is delivered by facsimile, email, or other electronic medium. These signatures must be treated in all respects as having the same force and effect as original signatures.
16. SEVERABILITY.
If any one or more of the provisions contained in this agreement is, for any reason, held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability will not affect any other provisions of this agreement, but this agreement will be construed as if those invalid, illegal, or unenforceable provisions had never been contained in it, unless the deletion of those provisions would result in such a material change so as to cause completion of the transactions contemplated by this agreement to be unreasonable.
17. NOTICES.
- (a) Writing; Permitted Delivery Methods. Each party giving or making any notice, request, demand, or other communication required or permitted by this agreement shall give that notice in writing and use one of the following types of delivery, each of which is a writing for purposes of this agreement: personal delivery, mail (registered or certified mail, postage prepaid, return-receipt requested), nationally recognized overnight courier (fees prepaid), facsimile, or email.
- (b) Addresses. A party shall address notices under this section to a party at the following addresses:
- If to the Claimant:
- If to the Respondent:
- (c) Effectiveness. A notice is effective only if the party giving notice complies with subsections (a) and (b) and if the recipient receives the notice.
18. WAIVER.
No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this agreement will be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy will be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, and no waiver will constitute a continuing waiver, unless the writing so specifies.
19. ENTIRE AGREEMENT.
This agreement constitutes the final agreement of the parties. It is the complete and exclusive expression of the parties' agreement about the subject matter of this agreement. All prior and contemporaneous communications, negotiations, and agreements between the parties relating to the subject matter of this agreement are expressly merged into and superseded by this agreement. The provisions of this agreement may not be explained, supplemented, or qualified by evidence of trade usage or a prior course of dealings. Neither party was induced to enter this agreement by, and neither party is relying on, any statement, representation, warranty, or agreement of the other party except those set forth expressly in this agreement. Except as set forth expressly in this agreement, there are no conditions precedent to this agreement's effectiveness.
20. HEADINGS.
The descriptive headings of the sections and subsections of this agreement are for convenience only, and do not affect this agreement's construction or interpretation.
21. EFFECTIVENESS.
This agreement will become effective when all parties have signed it. The date this agreement is signed by the last party to sign it (as indicated by the date associated with that party's signature) will be deemed the date of this agreement.
22. NECESSARY ACTS; FURTHER ASSURANCES.
Each party shall use all reasonable efforts to take, or cause to be taken, all actions necessary or desirable to consummate and make effective the transactions this agreement contemplates or to evidence or carry out the intent and purposes of this agreement.
[SIGNATURE PAGE FOLLOWS]
Each party is signing this agreement on the date stated opposite that party's signature.
| Date:______________________________ | By:____________________________________________________________ |
| Name: |
|
| Date:______________________________ | By:____________________________________________________________ |
| Name: |
How-to guides, articles, and any other content appearing on this page are for informational purposes only, do not constitute legal advice, and are no substitute for the advice of an attorney.
Arbitration agreement: How-to guide
In the business world, disputes are inevitable. Small disagreements may be resolved between the parties, but larger ones may linger and grow, leading to hard feelings, delayed deals, and lost business. The court system was designed to determine these issues, allowing the parties to argue their cases before a judge or jury. Unfortunately, courthouse resolution has become an increasingly costly and inefficient venture, and even simple cases can cost hundreds of thousands of dollars and take years to conclude. One way to avoid this process is to submit the dispute to arbitration.
When parties want to arbitrate their issues, an arbitration agreement (sometimes called a “submission agreement”) can be drafted and submitted to the selected arbitrator. Arbitration will take the place of a trial, and the parties give up their right to go to court in exchange for a quick and cost-effective resolution. By resorting to arbitration, you can eliminate unnecessary expenses such as attorney fees.
This article will give you a fair idea about the arbitration process, how to create an agreement, and things to take care of while creating multiple arbitration contracts. A written agreement minimizes confusion, misunderstanding, and error and clearly outlines the parties’ expectations and obligations. Once signed, each party can again focus on resolving the matter and returning to business as usual.
Things you should know in an arbitration process
Arbitration is a way for two parties to resolve disputes outside of court. Together with mediation, it’s often referred to as a kind of alternative dispute resolution or ADR. The individuals entering into arbitration put their dispute before one or more people called arbitrators, who resolve it and enter a decision. In most cases, arbitration decisions are final. In other words, it is the equivalent of a judge’s ruling and isn't a mere suggestion.
In most cases, arbitration is a voluntary process. In other words, both parties must agree to arbitrate their dispute—one party can’t enter into forced arbitration.
An agreement to arbitrate a dispute that has already arisen is sometimes called a “submission agreement.” A submission agreement is needed when the parties don’t have a written contract or a clause in an existing contract that provides that arbitration will be used to settle disputes between them. The submission agreement is used to start the arbitration with the selected arbitrator.
1. Laws governing arbitration
Most states have statutes governing arbitration, and there is a federal arbitration act that may also apply to your case. These laws vary from jurisdiction to jurisdiction and may require that an agreement contain specific language to be enforceable. For example, the Vermont Arbitration Act requires that the parties sign an additional agreement with a specific acknowledgment of their consent to arbitration.
2. Disputes where arbitrations don’t apply
There are some types of disputes that shouldn't (and may not, in some states) be submitted to arbitration. For example, many states prohibit the submission of healthcare-related disputes to arbitration. Review your state’s laws for additional information about the types of disputes that may be subject to ADR in your area.
3. Essential information to be included in an agreement
A particular arbitration agreement must, at a minimum:
- Be in writing
- Be signed by both parties
- Explain the dispute
- List the names and addresses of the parties
- Specify the amount of money involved
- Describe the proposed solution
After completing and signing the arbitration agreement, the parties must submit the document to the arbitrator or arbitration firm that they’ve selected.
4. Desk arbitration: What it is
When an arbitrator makes an award or decision based only on the documents provided by the parties as their arguments and evidence, such arbitration is termed "desk arbitration" by the American Arbitration Association (AAA). In a desk arbitration, no hearing is held.
5. Review and clarification
Before you sign arbitration agreements, the involved parties should be given ample time to review the document and or seek counsel if desired. This will reduce the likelihood, or at least the efficacy, of a claim that one party didn't understand the agreement’s terms or the effect of arbitration in general.
Both parties should review the completed agreement carefully to ensure that all relevant deal points have been included. It is better to be over-inclusive than under-inclusive. Don't assume that certain expectations or terms are agreed to if they aren't stated expressly in the document.
6. Signing arbitration agreements
Each party should be given at least one original, signed copy of the arbitration agreement.
Depending on the nature of its terms, you may decide to have your arbitration agreement witnessed or notarized. This'll limit later challenges to the validity of a party’s signature.
If the original agreement or the conditions of your arbitration are complicated, you can always seek legal advice from professionals. Paying a specific amount to an attorney can help you draft a document that'll meet your specific needs.
Key terms of an arbitration agreement
The following arbitration provision will help you understand the terms of your agreement.
1. Introduction of parties
The first section identifies the parties involved in the arbitration agreement. When a dispute arises, the parties who require arbitration will act as claimants. And the ones against whom the claimants raise the claims are called respondents.
The intro segment also includes details like:
- Cause of the dispute wherein you can give a brief outline of the nature of the dispute
- Issues you want to cover through arbitration and disputes that you don't want to include
- Details of the organization hired for the arbitration process and the rules followed in the dispute resolution procedure by this organization
In an arbitration agreement, the parties also have the ability to select the rules they want to govern their arbitration. There are a number of organizations that publish arbitration rules that their arbitrators will follow. Here are some organizations that provide alternative dispute resolution services:
- American Arbitration Association
- CPR Institute for Dispute Resolution
- JAMS Comprehensive Arbitration Rules and Procedures
If you're using industry-specific rules, for instance, for commercial disputes, follow commercial rules, and in the employment context, you can follow the rules of employee arbitration agreements of these organizations.
Note that this decision isn't irreversible. If these rules prove unwieldy down the road, you and the other party can change them by mutual agreement to suit your arrangement.
2. Submittal to arbitration
This is the part where the involved parties mutually agree to resolve their dispute using arbitration, and an arbitrator's decision is agreed as final.
3. Initiation of arbitration
This section explains how to start the arbitration itself. The process will vary depending on the rules you selected to govern your arbitration, but this paragraph provides some general guidelines. You have to provide the mailing (or online) address of the arbitration organization you selected to administrate your proceeding.
4. Arbitrator
Herein, you must decide on the number of arbitrators required to resolve your dispute. You can go for a single or private arbitrator or two or more than that, depending upon the severity of the dispute. You can even hire an arbitration service-providing company for your cases to take collective action out of the court. Often, retired judges take the job of arbitrators since they're believed to have the knowledge and capability to resolve arbitration cases.
5. Hearing
This section outlines the date, time, and location of the hearing for an arbitration case. Providing the name of the city, state, and country also helps in avoiding any confusion in the future.
6. Applicable laws and rules
Applicable law means the law that governs the arbitration agreement. This can be chosen by the people involved in the agreement.
Arbitration rules state that the arbitration will be governed by the rules governed in the agreement.
Familiarity with rules indicates that whichever rules the parties chose (e.g., AAA, CPR, etc.), they have read and become familiar with them. This is a good idea since it'll help you understand what happens throughout your arbitration process.
7. Preliminary relief
In some cases, the parties' rights will be harmed if they have to wait until a final decision is made. During such instances, the party who gets affected can ask for a preliminary relief. For example, if the dispute is about an action that'll take place in the next few days, one party may want to get a preliminary order that prevents that event from happening.
In this section, the parties are given the right to seek this relief either from the appointed arbitrator or from a local court. This is an optional provision, and according to the convenience of the involved parties, it can be included in an arbitration agreement.
8. Discovery
Discovery is the process through which each party has the opportunity to investigate the other party’s information (e.g., asking to see files, interviewing their witnesses, etc.). In litigation, this is a lengthy and complicated process, and it can drag on for years, costing the parties many thousands of dollars.
There are two options provided to conduct the discovery process. In the first, general authority is given to the arbitrator(s) to conduct the discovery as efficiently and equitably as it/they see fit. The second puts more exact, stringent limits on the conduct of discovery, providing a static time period within which discovery must be completed.
9. Conduct of hearing
A description of how the arbitration proceedings will work. Below are some of the mandatory arbitration clauses that are included in this section:
(a) Management of proceedings: Gives the arbitrator(s) the ability (and authority) to run the proceedings to make them efficient and as economical as possible.
(b) Powers: To help the arbitrator(s) decide the case, they're given the powers specifically listed in this subsection (including powers to limit testimony or other procedures in the interest of efficiency and cost-effectiveness).
(c) Oath required: Provides that any testimony given in the arbitration will be given under oath.
(d) Right to counsel: As in a court setting, each party to the arbitration is given the right to hire legal representation (but neither is required to do so).
(e) Subpoenas: Allows the parties to require that witnesses attend the proceedings or that documents be provided under subpoena. This subsection makes clear that this power—standard in courthouse proceedings—has been incorporated into the arbitration process.
(f) Unavailable witnesses: Permits the use of the testimony of witnesses not testifying in person to the extent that it would be permitted in a courthouse in the governing jurisdiction.
(g) Deadline: Indicates that if something is supposed to be completed by day X (e.g., papers submitted or tasks performed), the party has until 5:00 p.m. on day X to complete it.
(h) Copies: States that whenever one party gives a document to the other, they must also give a copy to the arbitrator(s).
(i) No record/record of proceedings: This is where the parties need to confirm whether they want the arbitration process to be recorded or not. If a recording is made, they'll need to provide a copy to the arbitrator(s).
10. Award
(a) Form of award: This explains the number of remedies indicated by the arbitrator, which range from payment of damages to entering their reasoning about the decision. In commercial cases, arbitrators usually won't write an opinion explaining the reasons for the award unless all of the parties request one.
(b) Timing: Herein, mention the specific time that should be taken by the arbitrators to reach a resolution. The time taken may vary depending on the complexity of your case and the extent of your dispute, and you should make sure you leave enough time to detail your case and have it decided.
(c) Written statement: Provides that the arbitrator(s) will provide a “tentative” decision to the parties before it becomes final. The parties will have the opportunity to respond, and the arbitrator(s) will enter the final decision in the following few days.
(d) Damages: Punitive damages are damages paid not to repay one party for a loss it experienced but to deter the other party from taking the same actions again. In other words, it is a “punishment” of the defendant and not the plaintiff's compensation.
(e) Costs/fees: Although arbitration is considerably cheaper than litigation and other dispute resolution alternatives, there are still some costs involved in the process. This section allows you to divide those costs and fees between the parties as you see fit. You can either split the costs and fees equally (or as decided by the arbitrator(s)), or the losing Party (as determined by the arbitrator(s)) will be responsible for both parties’ fees and costs.
11. Confidentiality
This section allows the parties to restrict how information regarding their dispute will be used outside of the hearing. Note that arbitrators are already subject to confidentiality laws under the general rules of arbitration, but this section reiterates that responsibility.
12. Consideration
“Consideration” is what each party gives in the contract. In many cases, this is money one party gives in exchange for goods or services the other provides.
13. Effect of agreement on third parties
A statement that nobody other than the parties is intended to benefit from the arbitration agreement. This may seem obvious, but there are some contexts in which the arbitrator’s decision has been extended to companies that didn't sign the agreement (e.g., if one group company signs, it may bind other members of its group). If a company “benefits” from an agreement, it may also be thought to be covered under it. This section ensures that non-parties won't be bound by the agreement by receiving specific benefits from it.
14. Exclusion of liability
Prevents the arbitrator from being held liable for its actions in the arbitration.
15. Successors and assigns
States that the parties’ rights and obligations will be passed on to heirs or, in the case of companies, successor organizations or organizations to which rights and obligations have been permissibly assigned.
16. No implied waiver
It means that if either party allows the other to ignore or break an obligation under the agreement, it doesn't mean that the party waives any future rights.
17. Notice
Mention the addresses to which all official or legal correspondence should be delivered for both the claimant and the respondent.
18. Counterparts; electronic signatures
The title of this provision sounds complicated, but it is simple to explain. It says that even if the parties sign the agreement in different locations, or use electronic devices to transmit signatures (e.g., fax machines or computers), all of the separate pieces will be considered part of the same agreement. In a modern world where signing parties are often not in the same city - much less the same room - this provision ensures that business can be transacted efficiently without sacrificing the validity of the agreement as a whole.
19. Severability
Protects the terms of the agreement as a whole, even if one part is later invalidated. For example, if a state law is passed prohibiting choice-of-law clauses, it won't undo the entire agreement. Instead, only the section dealing with the choice of law would be invalidated, leaving the remainder of the contract enforceable.
20. Headings
This section explains that the headings at the beginning of each section are meant to organize the document and shouldn't be considered as operational parts of the agreement.
21. Entire agreement
In this section, the parties agree to the terms and conditions mentioned in the agreement.
Creating arbitration agreements and ensuring that all the arbitration clauses are in your agreement can be a tricky and complicated process. In case you’re in the middle of such a soup, using an arbitration agreement template as your initial reference point is preferable.
LegalZoom's readily available agreement templates make the agreement drafting process much easier at an affordable price. Our templates are preformatted with all the essential clauses, terms, and conditions in place.
The process is pretty simple. Just fill out the required information in the blank agreement template. Once it is completed, you can download the document.
If you want to make changes to the existing template and customize it, you can do it with our rich editor, which is provided with the template.
Frequently asked questions
What's an arbitration agreement?
If a business dispute occurs, the time and money it takes to go to court can make a challenging situation even more unpleasant. One way to settle a dispute without the hassle of court proceedings is through arbitration. In an arbitration agreement, sometimes called a submission agreement, both parties agree to abide by a decision made by an appointed arbitrator. This often resolves the dispute in a more timely and cost-effective manner.
What key details should you have while creating arbitration agreements?
While creating an arbitration agreement, the following information should be kept handy:
- Name and contact information of the business or the individuals involved in the agreement
- Conditions required for the arbitration, i.e., how two parties will their arbitrator, which governing body's rules will be followed, number of arbitrators involved, and other terms and conditions
- Location or place where the arbitration proceedings will be held
- The time period when the proceedings will start and how long arbitrators should take to reach a decision
Arbitration Agreement Template
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