Careful Drafting Can Avoid Unnecessary Arbitrations

 

When drafting an arbitration clause in a contract, consider requiring that the loser of the arbitration bear the winner’s costs and expenses.  When a dispute arises, this clause can make clients think twice about whether they really want to pursue arbitration – and risk having to pay the winner’s costs and expenses.  Faced with that possibility, clients often work harder to resolve problems rather than quickly resorting to arbitration.

Some arbitration clauses require that one or two tiers of upper level management try to resolve disputes before arbitration begins.  Again, trying to resolve the problem amicably in advance can save lots of expense in the long run. 

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