Rethinking Your Arbitration Agreement
As an arbitrator, I have seen countless arbitration agreements — some good, some bad, but very few being anything more than a boilerplate template. While the American Arbitration Association’s excellent ClauseBuilder tool is available on its website, it seems far fewer use it than should. Instead, it seems that the clauses are simply cut and pasted from prior, different contracts.
In his article that was just published, Scott Van Soye, takes a deep dive into arbitration clauses — what should be in there, what should not, and how practitioners should reframe their thinking. For instance, an agreement Abbott Laboratories will use provides for:
No discovery
Twenty-eight days for senior executives to negotiate
Failing successful negotiations, 56 days to hold an arbitration
Submission of exhibits, witness lists, and briefs not exceeding twenty pages.
Two days of hearings, with no more than five hours for each party to present its case
A proposed resolution by each party
Mandatory selection by the arbitrator
Recovery of fees and costs by the prevailing party
In the end, as Scott points out, a good arbitration agreement should take these points into consideration:
A process that right-sizes disputes, treating different kinds of conflicts differently
A strong delegation clause keeps the courts out of the arbitration proceedings
A multi-step ADR program that gives parties the opportunity to negotiate and mediate the dispute before arbitration is necessary
A confidentiality agreement
A bare award if confidentiality is critical; otherwise a reasoned award
A focus on the client’s identified interests
Detailed knowledge of the arbitration rules
