Partnership Disputes in Florida: Can You Get Out of a Mandatory Arbitration Clause?
Arbitration is a private process that is an alternative to litigation. It is governed by the Florida Arbitration Code. A contract—including a partnership agreement—may call for the mandatory arbitration (forced arbitration) of a dispute. A mandatory arbitration clause in a partnership agreement is generally enforceable, but there are some exceptions. Within this article, our Miami partnership lawyer explains what you should know in more detail.
Starting Point: Mandatory Arbitration Provision Requires Parties to Forgo Litigation
The partnership agreement is the foundation of the relationship between business partners in Florida. If a dispute arises, the agreement will be key to resolving the matter. Notably, many partnership agreements in our state contain a mandatory arbitration clause. How does this provision work in practice? If business partners end up in a legal dispute over their relationship, they effectively pre-agree to avoid court. Instead, they have to resolve their matter through arbitration.
Florida Generally Enforces Mutually Bargained-for Mandatory Arbitration Clauses
As it pertains to forced arbitration clauses, Florida law is consistent with federal law. Courts five wide deference to these agreements. Indeed, in Florida, a court will usually take these arbitration provisions seriously and uphold the agreement. If everyone involved agreed to the clause when they signed the contract, they are expected to follow it. Even if the partnership went very wrong and you want to take the issue to court, you will typically be required to arbitration if you signed a partnership agreement that contains a mandatory arbitration clause.
The Exceptions: When You Get Out of a Mandatory Arbitration Clause in Florida
Can you ever get out of a mandatory arbitration clause for a partnership agreement in Florida? The answer is “yes”—though only if one of the state’s relatively narrow exceptions appeals. A court may set aside a mandatory arbitration provision on any of the following grounds:
- Unconscionable: A mandatory arbitration clause that is extremely unfair to one of the parties may not be enforceable. In Florida, this type of argument contends that the clause in question is “unconscionable.”
- Ambiguous Clause: Did the business partners actually intend to sign a forced arbitration clause? Maybe not. If there is ambiguity over the clause, then it could potentially be set aside. Courts in Florida may opt not to enforce an ambiguous contract.
- Inapplicable: Finally, there might be situations where the arbitration clause just does not apply. If one of the business partners (allegedly) committed fraud or another type of illegal act, a claim over that issue is likely not subject to mandatory arbitration.
Contact Our Miami Partnership Dispute Attorney Today
At Pike & Lustig, LLP, our Miami partnership dispute lawyer is a reliable and experienced advocate for clients. If you have any questions about a mandatory arbitration clause in a partnership agreement, we can help. Contact us today to arrange your confidential initial case review. From our office in Miami, we handle partnership disputes all across South Florida.