Overview

An Arbitration or Dispute Resolution clause provides that any dispute arising between contracting parties are to be settled by an arbitration tribunal. The principal considerations in drafting a dispute resolution clause are:

  • Binding or Non-Binding: Binding arbitration clauses are enforceable by the courts, meaning that the decision of the arbitrators is final. Non-binding arbitration clauses allow parties to ignore the tribunal's decision and take the dispute to court are possible but very rare.
  • Selection of Rules: A large number of domestic and international dispute resolution rules are available. In the US, the most popular are CPR Institute for Dispute Resolution, American Arbitration Association, JAMS/Endispute, and National Arbitration Forum.
  • Selection of Arbitrators: The clause may determine the number and qualifications of the arbitrators and which party has the right of selection or rejection.
  • Timing and location: The clause may define the schedule for submitting disputes and the location for the hearing.