A mandatory arbitration clause is a provision in a contract that requires parties to resolve disputes through arbitration rather than through litigation in court. This clause aims to facilitate a quicker, more cost-effective resolution process and is often included to limit legal expenses and avoid lengthy court battles.
Loan is subject to Mandatory Arbitration.
The Company acknowledges that you will have the right to be represented by legal counsel at any arbitration proceeding, at your own expense. This section does not apply to an action or claim that cannot be subject to mandatory arbitration as a matter of law, including, without limitation, sexual assault disputes and sexual harassment disputes as defined in the FAA, to the extent such claims are not permitted by applicable laws to be submitted to mandatory arbitration and the applicable laws are not preempted by the FAA or otherwise invalid (collectively, the “Excluded Claims”).
In the event you intend to bring multiple claims, including one of the Excluded Claims listed above, you understand that the Excluded Claims may be filed with a court, while any other claims will remain subject to mandatory arbitration.
You and the Company hereby agree that any suit, action, or proceeding arising out of this Agreement and permitted by this Agreement to be brought outside of the Company’s Mandatory Arbitration Program (as set forth in Section 9 of this Agreement) shall be submitted to and brought exclusively before the appropriate federal or state courts in and for the State of New York.
Notwithstanding the minimum standards for JAMS under the Mandatory Arbitration Program, the venue provisions of this Agreement shall control any dispute or Proceedings. The terms and provisions of this Agreement shall be construed fairly as to both parties hereto and not in favor of or against any party, regardless of which party was primarily responsible for the preparation of this Agreement.
You and the Company acknowledge and agree that: (a) this Agreement is subject to the Company’s existing Mandatory Arbitration Program which is incorporated into this Agreement by this reference; and (b) the Company’s existing Mandatory Arbitration Program is not superseded or replaced by this Agreement. Any dispute, controversy or claim arising out of or related to your employment with the Company, this Agreement (including the validity of this arbitration clause), or any breach of this Agreement shall be submitted to and decided pursuant to the Company’s existing Mandatory Arbitration Program; provided that this Section 9 shall not preclude the parties from seeking provisional remedies in aid of arbitration or equitable remedies from the courts designated in Section 8 of this Agreement.
Mandatory arbitration refers to a contractual clause in which parties agree to resolve any disputes through arbitration rather than through the court system. This often involves a private and binding decision made by a neutral third-party arbitrator. The clauses are typically found in consumer and employment contracts and are designed to provide a quicker and less formal resolution process compared to litigation.
Mandatory arbitration may be appropriate when you seek a faster, more cost-effective alternative to traditional court litigation. It can be beneficial for businesses aiming to avoid lengthy and public legal proceedings. It may be used when parties desire confidentiality or when there are concerns about the ability to enforce decisions across jurisdictions.
When drafting a mandatory arbitration clause, it is crucial to ensure clarity and fairness. Here is a guide to writing it:
Describe the Scope: Clearly define which disputes are subject to arbitration.
Select Arbitration Rules: Specify the set of arbitration rules or the institution that will govern the process (e.g., American Arbitration Association).
Choose Venue and Jurisdiction: Identify the location where the arbitration will take place.
Appointment of Arbitrator: Detail the method for selecting an arbitrator or panel of arbitrators.
Binding Nature: State that the arbitrator’s decision will be final and binding.
Confidentiality: Address whether the proceedings and outcomes are to remain confidential.
Example:
“Any dispute, claim, or controversy arising out of or relating to this contract, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in [City, State] before a single arbitrator. The arbitration shall be administered by [Governing Body] under its [Rules]. The arbitrator’s award shall be final and binding, and judgment may be entered upon it in any court having jurisdiction.”
Mandatory arbitration clauses are commonly found in the following types of contracts:
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