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Four Issues that Should be Addressed in Your Arbitration Clause


For businesses, arbitration offers many benefits over traditional litigation. It is a form of alternative dispute resolution (ADR) that can be used to obtain faster, less expensive, and more efficient results than a lawsuit. In addition to that, arbitration also allows the parties to keep considerable confidentiality regarding the proceedings.

In many cases, commercial agreements contain mandatory pre-dispute arbitration provisions. If your contract includes such a clause, it is imperative that the language is properly drafted. Small drafting errors could lead to major problems down the road. Here, our experienced West Palm Beach business arbitration lawyers highlight four issues that should be addressed in any arbitration clause.

Terms that Should Be in a Business Arbitration Provision 

  1. The Deadlines to Take Action

Any commercial agreement that contains a mandatory arbitration clause should clearly outline the deadlines that all parties must follow. If the deadlines are not set, the parties to the contract could run into a dispute over that issue. This is a major problem, as, in some cases, arbitration provisions could simply be ruled unenforceable as a result of their unclear, undefined nature. Proper drafting is a must. 

  1. The Rules and Limits of Discovery

Similar to litigation, discovery is an important part of the arbitration process. Though, with arbitration, parties to the contract can retain some additional control over discovery. In some cases, limits to discovery can be included within the arbitration clause. Both parties may benefit from limiting discovery; it could reduce potential cost of a dispute in the future. However, businesses do need to be very careful with this type of language. 

  1. How the Arbitrator Will Be Selected

Perhaps most importantly, the arbitration clause should clearly articulate how the process will be used to select the arbitrator. Parties must be sure that they will have access to a fair, impartial arbitration proceeding. If your commercial agreement contains an arbitration clause, make sure that you know precisely how the arbitrator will be picked. 

  1. The Extent to Which Confidentiality is Owed

One of the key benefits of arbitration is that it allows for confidentiality. Your arbitration clause should ensure that you get as much confidentiality as you desire. While arbitration proceedings are not automatically public record, the results can be disclosed in some cases. For example, in arbitration proceedings overseen by the Financial Industry Regulatory Authority (FINRA), the parties retain partial confidentiality. While the specific findings are not public records in these cases, the amount of the award is published. In your contract, you have the ability to guarantee full confidentiality if you so choose to do so. Know your needs.

Contact Our West Palm Beach Business Arbitration Lawyers

At Pike & Lustig, LLP, our experienced West Palm Beach business law attorneys have deep experience representing clients in arbitration proceedings. Whether you need guidance drafting or reviewing an arbitration clause, or your company is preparing for arbitration, we can help. From our main office in West Palm Beach and our other locations in Miami and Palm Beach Gardens, we represent individuals and businesses throughout South Florida.



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