Arbitration Agreement

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An arbitration agreement is a legally binding contract between two parties that offers an alternative dispute resolution to avoid civil court litigation. An arbitration contract is the best option to solve conflicts arising in business processes or between the parties. Fill out this arbitration agreement form on Lawrina, download it in PDF, and use it to resolve your dispute peacefully.

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Template Description

business people shaking hands and agreeing on a work matter

An arbitration agreement is a legally binding contract between two parties who agree to resolve any disputes that may arise from their working relationship through arbitration instead of court action. The agreement outlines the terms and procedure for the arbitration process, such as the appointment of an arbitrator, rules of evidence, and governing law, among other details. Create your attorney-drafted arbitration agreement sample on Lawrina, customized to your specific situation and built on the information you provide, or download and use it as is.

What Is an Arbitration Agreement?

A contract arbitration is a legally binding contract between two parties that offers an alternative dispute resolution to avoid civil court litigation. If a dispute arises between parties who have a mutually agreed upon and signed contract, they enter into a process known as arbitration. An arbitration agreement template is often just a clause in a broader contract, such as a purchase agreement or employment contract.

Insight

To ensure the enforceability of the arbitration agreement or clause, the agreement should: 

  1. Designate arbitration as the form of dispute resolution, specifying that any award is binding on the parties;
  2. Clearly define the scope of arbitration clause so that it covers all disputes arising under the contract; 
  3. Designate the procedural rules of the arbitration institution as well as place of arbitration;
  4. Specify the number of arbitrators and language of arbitration;
  5. State that the FAA governs the arbitration agreement as well as provide that judgment may be entered on the arbitral award by any federal or state court having jurisdiction.

Parties of the Arbitration Agreement

Parties in a blank arbitration letter template may include:

  • Two or more individuals who agree to settle disputes through arbitration
  • Individuals, companies, or partnerships in a contractual relationship or some other form of arrangement

The agreement specifies details of an arbitration process, and the arbitrator's decision is legally binding to them. 

Key Terms

To fully appreciate the implications of an arbitration agreement, all parties must understand the complex terminologies they may find in it. Some of them are: 

  • Arbitrator — An arbitrator is a neutral third party appointed by the disputing parties or an arbitral institution to hear and resolve disputes through arbitration. An arbitrator's decision is called an arbitration award and is typically enforceable in a court of law. The main function of the arbitrator is to listen to the facts of the case, consider the evidence, and apply the law to make a fair and impartial decision. 
  • Arbitral tribunal — An arbitration tribunal is a panel of one or more arbitrators. An arbitration agreement specifies the composition of a tribunal. 
  • Burden of proof — The term refers to the responsibility of each party in an arbitration agreement to prove its case and provide evidence supporting its position.
  • Confidentiality — In the agreement, parties can commit not to disclose the details of the arbitration process or award it to the public or any third party.
  • Discovery — The process of obtaining the relevant information and evidence from the other party to resolve a dispute is called discovery. The agreement defines the scope and methods of arbitration discovery. For instance, the arbitration agreement may provide that the arbitrator can order depositions and the production of documents. Discovery methods may also include:
     
    • Interrogatories — Useful for addressing issues that arise during the arbitration, interrogatory is a term used to refer to the request to a party to provide answers to written questions. 
    • Request for admission — Useful for simplifying the disputed issues that need resolving, requests are made to the other party to admit or deny certain facts relevant to the process. 
  • Evidentiary rules — These are the rules that govern the introduction of evidence into the proceeding. An agreement may outline independent evidentiary rules or indicate that rules of evidence will depend on the rules of the jurisdiction where the arbitration is taking place. 
  • Final and binding award — This means the decision of the arbitrator is binding and cannot be appealed unless a party can prove that the arbitrator was partial or in other limited circumstances. 
  • Governing law — This is the state law the parties will rely on in interpreting the terms of the arbitration agreement. It determines the responsibilities and obligations of the parties and the substantive legal issues the process will resolve. Governing law may be state law, federal law, an international instrument, or the law of a foreign country. 
  • Jurisdiction — An arbitrator's power to hear and determine the disputed issues. The jurisdiction may be determined by the agreement or conferred by the relevant statute as determined by the governing law. 
  • Remedies — Corrective measures awarded to the party that wins the dispute. It may be specific performance or monetary compensation. 
  • Waiver of rights — In the agreement, parties may waive their right to appeal the arbitrator's decision or the right to a jury trial. 

Advantages of Signing an Arbitration Agreement

There are a few key reasons you should consider signing a simple arbitration agreement form:

  • Reducing the costs of dispute resolution –– no more expensive fees for court hearings and hours of work of attorneys 

  • Improving the speed of dispute resolution –– with a signed arbitration agreement, you can resolve a dispute much quicker

  • Protecting sales in a digital world –– with a signed arbitration, your consumer rights are protected and you have no need to pay for expensive litigation in case of disputes

  • Getting more flexible rulings than the civil court can issue –– because the process is far more casual, there are higher chances both parties can enjoy the final outcome

  • Avoiding public records of proceedings –– this is a common reason why people prefer arbitration to litigation, as there is no public record. Confidentiality is much higher during arbitration

Insight

Arbitration cases are more flexible in terms of witnesses’ testimonials. Any person with information of the relevant facts and pieces of evidence can be a witness as is mentioned in most state laws. Cross-examination is regularly used in arbitrations in the U.S.

What Should Be Covered in the Agreement?

Make sure to cover all the following points in your printable arbitration contract example:

Parties’ Contacts

The agreement should start with the full names and contact information of both parties who sign the agreement, including a registered address.

Elected Arbitrators

There should be contact details of individuals who have been chosen to provide counsel and arbitration for this agreement. These arbitrators should be approved by both parties of the agreement and have no connection or biased attitude to any party. Parties specify how many arbitrators there should be. It is often better to have three arbitrators since each party gets a chance to nominate one for a more objective decision. 

Insight

There are generally no restrictions on the parties’ autonomy to select the arbitrators. The arbitration agreement or clause can specify particular criteria that an arbitrator must meet, the number of arbitrators, the method of their selection, and each party's input into the arbitrator selection process.

Pre-Hearing Conference

This is an important clause that proves that both parties are aware of the pre-hearing conference in case the arbitrators need details or clarification of any claims.

Final Hearing

Details on when and where the final hearing will take place.

Costs and Fees

This clause states that both parties will split all arbitration-related fees and expenses equally unless agreed upon differently.

Applicable Law

 This clause should state in accordance with which laws the arbitration will take place.

Award

This clause outlines any awards that should be granted to the aggrieved party, the date they should be delivered, and an explanation of the award.

Although the clauses mentioned above are the most common, arbitration agreements can actually cover many more issues that may arise after signing a contract. The more detailed your arbitration agreement is, the higher the chances that the parties will be able to minimize disagreements and be satisfied with the final outcomes of arbitration. It is also common to include an arbitration clause to a contract that covers specific issues as opposed to signing a separate arbitration agreement.

How To Write an Arbitration Template

Writing an arbitration form pdf requires close collaboration between all the parties involved. Everyone must agree to all terms outlined in the document. The steps each party should take include the following: 

  • Identify the purpose of the arbitration agreement — Determine the purpose of the arbitration agreement and the types of disputes it will cover.

  • Choose the arbitration institution — Decide which arbitration institution will hear and resolve disputes. Examples include an established arbitration institution, such as the American Arbitration Association (AAA), the International Chamber of Commerce (ICC), or an ad-hoc arbitration not administered by any established organization.

  • Choose the governing law — Identify the law that will govern arbitration, considering the nature of the dispute. The legal system that governs the dispute determines the outcome. Therefore, parties must work closely with an attorney to identify the governing law. 

  • Agree on the process of selecting an arbitrator — Agree on the number of arbitrators, their qualifications and experience, and the process of choosing them.

  • Set the procedural rules for arbitration — Think through the rules governing arbitration, including the rules of evidence, discovery, and other relevant procedures.

  • Draft and sign the arbitration agreement — Jointly prepare a document that reflects the agreed-upon terms and have all parties sign it.

Each party should carefully consider the terms of the arbitration agreement, as it will govern the process and outcome of the dispute. The parties should carefully draft the contract to ensure that each entity's rights and obligations are clearly defined and protected. Additionally, the parties should be mindful of any legal requirements for arbitration agreements, such as the requirement for a written agreement or specific language.

Warning

Domestic arbitration awards as well as international arbitration awards rendered in the US must be “confirmed” by an order of the court before enforcing. The FAA, which stipulated the requirement for confirmation of the arbitration awards in federal courts, requires the filing of a petition to confirm along with supporting documents (e.g., a copy of the award and a copy of the arbitration agreement). Such a petition shall be filed within one year after the award is made by any party of the arbitration. 

When To Use an Arbitration Agreement

When two or more parties are in a contractual engagement, another formal arrangement may opt for arbitration instead of court action to resolve their disputes.

Common Use Cases

You can have an arbitration agreement for the following types of disputes:

  • Employment law issues concerning employees
  • Commercial misunderstandings
  • Construction disputes
  • Intellectual property disagreements
  • Mergers and acquisition stalemates

When Not To Use an Arbitration Agreement

Not all disputes between parties can be solved in arbitration or through the dictates of an arbitration agreement. Some instances when an agreement will not be helpful include:

  • Non-arbitrable matters — Disputes with a criminal element or that concern family members or public policy are not arbitrable under law. 
  • Inability of a party to participate — If one of the parties in an arbitration agreement cannot meaningfully participate in the process,the agreement becomes ineffective. For instance, if a party cannot afford the financial burden of engaging in the arbitration process. 
  • If the agreement is invalid — An arbitration agreement that parties signed under duress cannot be enforced. 

State Law

The Federal Arbitration Act (9 U.S.C. § 1-16 “FAA”) governs arbitration agreements in contracts involving interstate commerce and applies in both federal and state courts. FAA requires that arbitration agreements be in writing to be enforceable.The form can vary; it can be an arbitration clause in a commercial contract, a stand-alone arbitration agreement, or other type of written agreement. 

Chapter 1 (9 U.S.C. § 1-16) stipulates general provisions applicable to arbitration agreements involving maritime, interstate, and foreign commerce.

The 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention") is implemented in Chapter 2 (9 U.S.C. 201-208), which governs any contractual or non-contractual relationship between parties that is deemed to be commercial in nature, unless both parties are citizens of the United States and the relationship involves property located abroad or has some other reasonable connection to one or more foreign states.

Chapter 3 (9 U.S.C. §§ 301-307) implements the 1975 Inter-American Convention on International Arbitration (“Panama Convention”). Where both the New York and Panama Convention could apply to the enforcement of an arbitral award, the NY Convention applies, unless the parties indicate the Panama Convention should apply. 

The US has not enacted the United Nations Commission on International Trade Law (“UNCITRAL”) Model Law, however several states have enacted statutes based on Model Law, namely: California, Connecticut, Florida, Georgia, Illinois, Louisiana, Oregon, and Texas. 

Other Regulations

  • California regulation: 2022 California Code of Civil Procedure, Part 3, Title 9 – Arbitration, Chapter 2 – Enforcement of Arbitration Agreements. 
  • Texas regulation: 2022 Texas Statutes/Civil Practice and Remedies Code, Title 7 – Alternative Methods of Dispute Resolution, chapter 171 – General Arbitration, Subchapter C- Arbitration. 

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Please note that Lawrina does not provide any legal services. The information on Lawrina’s Site and its downloadable content, including legal articles and templates, shall not be considered legal advice and is not guaranteed to be correct, complete, and up-to-date. If you require legal advice on your issue, we recommend you contact a qualified attorney licensed in your state. You personally assume full responsibility for any consequences, damages, and costs associated with your use of any content of Lawrina Services available on Lawrina’s Site. 

By using Lawrina’s Site you agree with mentioned above and give your irrevocable consent to comply with and to be bound by the provisions of Lawrina Service terms.

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Frequently Asked Questions

What are the legal limits of forced arbitration?

The general legal limits of forced arbitration are still not defined and will depend to a degree on the state court system. Different federal courts of appeal have different positions on forced arbitration in general.

Who gets to decide whether the agreement to arbitrate is enforceable?

State contract law always governs whether the agreement to arbitrate is enforceable. Specific contract laws depending on a state may make an arbitration agreement sample template unenforceable depending on the details of that case/contract.

What is the standard for arbitrator bias?

The standard is that an arbitrator should be mutually selected by both parties and should not be interested in (or somehow related to) one of the parties. Otherwise, objectivity is questionable.