Your Arbitration Clause Might Not Hold Up. Here Is How to Fix That.
You tucked an arbitration clause into your contract template years ago, copied from somewhere online, and never thought about it again. Then a dispute hits, and suddenly that clause is the only thing standing between a quiet arbitration hearing and a messy, expensive lawsuit. Will it actually work?
A poorly drafted arbitration clause can unravel exactly when you need it most. Florida courts will enforce arbitration agreements, but only if the clause is written the right way.
Florida Law Favors Arbitration, With Conditions
Florida has a strong public policy in favor of enforcing arbitration agreements. Fla. Stat. § 682.02 states that an agreement to arbitrate is valid, enforceable, and irrevocable except on grounds that would apply to revoke any contract, such as fraud or unconscionability. Courts decide whether an arbitration agreement exists at all, while an arbitrator typically decides whether the underlying contract is enforceable.
That sounds simple, but disputes over arbitration clauses land in Florida courts constantly. Usually the problem is not whether arbitration was intended. It is that the clause itself was vague, contradictory, or missing key terms.
What a Strong Clause Actually Needs
An arbitration clause should never be an afterthought bolted onto the last page of a contract. To hold up under scrutiny, it generally needs to address:
- Scope, meaning exactly which disputes are subject to arbitration and which are not
- The administering organization and rules that will govern the proceeding
- Where the arbitration will physically take place, since venue disputes are common
- How arbitrators are selected and how many will hear the case
- Whether the parties can still seek emergency injunctive relief in court
- Who pays arbitration costs and attorney’s fees if a dispute arises
Common Mistakes That Create Openings
Ambiguous language is the most frequent culprit. A clause that says disputes “may” go to arbitration, instead of “shall,” can be read as optional rather than mandatory. Clauses that conflict with other provisions in the same contract, such as a separate section pointing to litigation in a specific county, also give an opposing party ammunition to argue the arbitration agreement never applied. Even clauses copied from an outdated template can reference an arbitration organization that no longer exists or rules that have since changed.
Draft It Once, Draft It Right
Here is the uncomfortable truth: most business owners only find out their arbitration clause has a problem after a dispute has already started, which is the worst possible time to fix it. If your contracts have not been reviewed in a few years, or if you are drafting new agreements now, it is worth asking whether your clause would survive a challenge.
Our West Palm Beach business litigation attorneys at Pike & Lustig, LLP draft and litigate arbitration clauses for businesses across South Florida, and we have seen firsthand which provisions actually get enforced and which ones fall apart under pressure. Send us your current contract language and we will tell you plainly whether it needs work.
Source:
flsenate.gov/Laws/Statutes/2024/682.02
