Dispute Resolution and Arbitration Agreement: An Overview

In today`s business world, it is common for companies to include dispute resolution clauses in their contracts. These clauses outline the process for resolving any disagreements or disputes that may arise between the parties to a contract. In recent years, a popular form of dispute resolution has been arbitration. In this article, we will take a closer look at arbitration and its benefits, as well as what you should consider when including an arbitration clause in your contracts.

What is Arbitration?

Arbitration is a form of alternative dispute resolution (ADR) in which parties agree to resolve their dispute outside of court. Instead of a judge or jury, the parties present their case to an arbitrator (or a panel of arbitrators) who acts as the decision-maker. The parties may agree to binding or non-binding arbitration, which means that the decision of the arbitrator can be either final or advisory only.

Benefits of Arbitration

There are several benefits to including an arbitration clause in your contract:

• Privacy: Unlike court proceedings, arbitration is a private and confidential process. The parties can agree to keep the details of their dispute and the outcome of the arbitration confidential.

• Time and Cost Savings: Arbitration proceedings are typically faster and less expensive than court proceedings. This is because arbitrators can be selected and scheduled more quickly, and the process of discovery (the exchange of evidence) is usually less extensive.

• Expertise: Parties to an arbitration agreement can select an arbitrator who has expertise in the subject matter of the dispute. This can result in a more informed and accurate decision.

• Flexibility: The parties can agree on the rules and procedures that will govern the arbitration process. This means that the process can be tailored to the specific needs of the parties.

Things to Consider When Including an Arbitration Clause

Before including an arbitration clause in your contract, there are several things to consider:

• Applicable law: It is important to consider the applicable law when drafting an arbitration clause. Different states and countries have different rules and requirements for arbitration.

• Selection of Arbitrator: The parties should agree on a process for selecting an arbitrator. This can include selecting an arbitrator from a list of qualified individuals or agreeing on a specific individual.

• Scope of Arbitration: The parties should agree on the scope of the arbitration. This includes what disputes will be subject to arbitration and what remedies are available.

• Enforceability: It is important to ensure that the arbitration clause is enforceable. This includes ensuring that it complies with applicable laws and that it is not unconscionable.


Arbitration is a popular form of dispute resolution that offers several benefits to parties to a contract. It is important to consider the applicable law, selection of arbitrator, scope of arbitration, and enforceability when including an arbitration clause in a contract. By doing so, parties can ensure that they have a clear and effective process for resolving disputes that may arise in the future.