What is an “Arbitration Agreement” and what does it include?
An arbitration agreement is a formal document that establishes the framework of your arbitration process. It is provided by the arbitrator after:
- Both parties agree to proceed with arbitration.
- An arbitrator is mutually selected.
- A pre-arbitration conference call is conducted to confirm the issues needing resolution.
This agreement encompasses several key elements:
- Administrative details – the process and procedures for how the arbitration will be conducted.
- Billing information – details about costs and payment terms.
- Appeal rights – any conditions under which the arbitration decision can be appealed. In the absence of explicit appeal provisions in the arbitration agreement, the default appeal rights are governed by the provisions of the Arbitration Act.
- Legal issues – a list of the specific legal issues that you have agreed to arbitrate. These agreed-upon issues explicitly define the scope of what will be presented and decided by the arbitrator.
It is important to understand that arbitration is a binding process. The decision made by the arbitrator is final, much like a court order, and the parties are obligated to comply with the arbitration award. Therefore, it is recommended that parties seek legal advice before signing the arbitration agreement. This ensures a thorough understanding of the commitments and implications of the arbitration process.