Arbitration clauses are in numerous contracts ranging from simple consumer credit contracts to million-dollar asset purchase agreements. Often times, clients view arbitration as a way to save on legal costs and reach a more prompt resolution in the event of a dispute between the parties to a contract. Often times, arbitration is right for the specific situation and results in a quicker and cheaper resolution to a problem than civil litigation in traditional courts. However, based on my experience in handling many arbitrations, the cost savings and rapid resolution imagined by the parties may not always be reality. That chance, coupled with some of the limitations that may be imposed by the arbitration process as compared to traditional civil litigation in a court of law requires parties considering arbitration clauses to carefully consider their specific situation.
A couple of years ago, I wrote an article about the pros and cons of arbitration and arbitration clauses. The article discusses many of the issues that parties to any contract should consider before inserting or agreeing to an arbitration clause. I have linked the article below. Before entering a contract containing an arbitration clause, talk to an attorney to see if the proposed method of arbitration is right for your specific situation.