Drafting An Arbitration Provision - The VirtualCourthouse Way

more+
less-

VirtualCourthouse provides a fresh new approach to arbitration. An approach which provides flexibility and cost savings not available through AAA, JAMs, National Arbitration Forum. Have you noticed that arbitration has become more time consuming and more expensive as each year passes? How has that happened when the whole notion, 50 years ago was, for Arbitration to reduce the cost and time of litigation? Well, one observation would lay the blame at the foot of trying to provide too many rules to cover to many possibilities. Take a look at any major ADR provider’s rules - in many cases they are more involved than courts rules of procedure.

Here is how the unaware gets caught up in that dilemma. Client engages a lawyer to draft a contact. Lawyer suggests to client that it is best to insert a provision in the contract agreeing to arbitrate any dispute. Client is aware of all of the horror stories about the cost of litigation and says “by all means keep me out of court “. Lawyer inserts a provision which says - “Any dispute between the parties will be arbitrated in accordance with the rules of the American Arbitration Association.” Two years go by and the parties have a major disagreement. One party looks up the AAA rules and finds out that the AAA rules require the claim to be filed with AAA. The parties now have no choice about how much will be charged or who the arbitrator will be. AAA’s panels of neutrals are not competitively formed. AAA restricts the number of neutrals - never a good idea as that type of activity keeps prices high and many highly qualified neutrals off of AAA panels. They have agreed to a dispute resolution service that provides little flexibility - many would say more expensive than court. Many attorneys find the AAA administrative process to be cumbersome, unwieldy and time consuming.

What then is the best way to draft an arbitration provision in a contract? The first order of business is to understand the legal territory.

LOADING PDF: If there are any problems, click here to download the file.

Reporters on Deadline

CONNECT

The Honorable Arthur M. Monty Ahalt was appointed to the Circuit Court for Prince George's County,... View Profile »


Follow Arthur Ahalt: