If you’ve ever signed an employment contract, business agreement, or even a credit card application, you may have come across the word arbitration. Arbitration is a process that involves taking a disagreement before an impartial third party to resolve an issue: “[It] is a form of alternative dispute resolution (ADR), used in place of litigation in the hope of settling a dispute without the cost and time of going to court” (The Balance.com).
Chances are you will see this word in a contract at some point, so it’s important to understand what’s involved in contract arbitration, and how it will affect you and your business, should a conflict occur later on.
What You Need to Know about Contract Arbitration
- During the process of arbitration, you will need to hire an arbitrator, someone who acts as the impartial third person to help both parties reach a solution for a contract dispute. The arbitrator listens to each side of the argument and works to form an agreement to settle the conflict.
- Arbitrators are usually hired through arbitration agencies, or as independent arbitrators. Agencies may charge either a percentage of the dispute amount, or they may have a set price. In many cases, it’s helpful to also hire an attorney to assist in the process of contract arbitration, as your business attorney can help you prepare, understand your rights, and represent you, should your case end up going to trial.
- Arbitration decisions may or may not be legally binding. In binding arbitration, the decision must be upheld by both parties and will not be reviewed or overturned. In comparison, a nonbinding arbitration allows either party to reject the decision and pursue a trial by judge instead.
- Arbitration may be either mandatory or voluntary. As you may guess, a voluntary arbitration involves both parties choosing to resolve the dispute with the help of an arbitrator. If the contract includes a mandatory arbitration, however, both parties are required to resolve the issue with the help of an arbitrator.
Contact KTF Law Today
If you’re in need of legal advice, professional representation, or experienced contract drafting, contact KTF Law Firm. Our Minnesota lawyers represent both individuals and businesses navigate through the process of contract arbitration, so you always know your rights and receive the professional, and experienced, legal support you deserve!