Arbitration clauses, often tucked away in the fine print of contracts, are powerful tools for resolving disputes efficiently and fairly. While they may not be as glamorous as other contract terms, they offer a number of advantages. Here are three reasons to consider including an arbitration clause:
1. Control Over the Process
One of the primary advantages of arbitration clauses is that they allow the parties to select the arbitrator or panel – an advantage not afforded to parties in most other settings. This provides a level of control often lacking in a traditional court setting, where judges are assigned at random. Additionally, arbitration gives the parties greater control over the rules and procedures to be followed, creating a more tailored and efficient process.
2. Speed and Efficiency
Traditional litigation can drag on for a year or more, causing significant disruptions and financial strain. Arbitration, on the other hand, can be a much faster process. With fewer procedural hurdles and a more streamlined approach, parties can often expect a swifter resolution to their disputes.
3. Confidentiality and Privacy
Arbitration proceedings are generally confidential, offering a level of privacy often lacking in open courtrooms where proceedings are typically a matter of public record. This confidentiality protects sensitive business information and maintains the privacy of the parties involved.
Incorporating arbitration clauses into contracts is a strategic move that can lead to more efficient, cost-effective, and fair dispute resolution. By providing control over the process, expediting timelines, and ensuring confidentiality, arbitration clauses offer a host of advantages that can significantly benefit parties in the event of a dispute. It is a small clause with big implications and one that should not be overlooked in the realm of contract negotiations.