How is that arbitration provision going to affect your dispute? Arbitration clauses are commonly found in certain contracts, wherein it is designated as the chosen method of dispute resolution. Parties often do not focus on the exact language of an arbitration clause until a dispute arises. These provisions can significantly alter the rights of the contracting parties and therefore, should be reviewed and considered in detail. The deliberate selection of an arbitration clause and arbitration provider while drafting a contract will help fulfill the intentions of the parties in an equitable and informed manner.
Parties to a contract sometimes adopt arbitration clauses that later are determined to be too wide in their scope and breadth. For example, parties often accept clauses, which are frequently suggested by arbitration providers, which empower arbitrators to determine issues that are ordinarily under the auspices of court review. Moreover, arbitrator’s decisions are generally binding and not subject to judicial review, absent extenuating circumstances, such as bias. California courts have repeatedly held that a court’s review of an arbitrator’s decision in interpreting a contract is substantially limited. Therefore, parties to an arbitration clause who object to the outcome of the proceedings often have few alternatives.
Given the inclination toward including arbitration clauses in contracts and preserving their outcomes, parties should be sure to review and agree upon the matters which will be arbitrated and carve out those issues to be reserved for trial or appeal in a courtroom forum. If the parties select an ADR provider, they should be apprised of the procedures for that provider and mutually consent to utilize particular rules. One of the decisions that the parties should agree to is the choice of jurisdiction for the arbitration proceeding.
If you are a party to a contract with an arbitration clause or drafting an agreement and including such provision, it is important to get the advice of an attorney with years of experience in alternative dispute resolution to understand and protect your rights and interests. Contact Shane Coons at 949-333-0900 or visit www.ShaneCoonsLaw.com to learn more about his practice.