Arbitration Agreement

Some very experienced arbitrators and advocates have observed that the most important part of the arbitration is choosing the right arbitrator. Arbitrator profiles and even meeting a potential arbitrator in advance of selection – while exercising care not to cross the line into ex parte communications – have become commonplace in both high stakes domestic and international arbitration.

However, if, in fact , the most important part of an arbitration, the next most important part of any arbitration is the arbitration agreement. Arbitration begins long before there is dispute. Too often, a transaction lawyer will have some dim law school memory of something called the “Federal Rules of Civil Procedure,” and insert a reference to it into an arbitration clause. For example: “Discovery will be conducted according to the Federal Rules of Civil Procedure.” Taking this approach undermines the advantages and flexibility available in arbitration.

Sometimes, transaction lawyers will turn to their arbitration-practicing colleagues and say something like, “We’re almost ready to close. Can you give us an arbitration clause quickly? We need it in fifteen minutes.” I’ve seen both of these things happen. The brief, though sometimes helpful, arbitration clauses published by institutions or found in the appendices of arbitration manuals, can give the impression that an arbitration clause is a quick and easy thing to conjure up. But, as any good conjurer knows, it is the practice and preparation that makes it look easy.

A good arbitration clause should be drafted with a deep understanding, born of experience, practice, and training, of arbitration law. It also must be grounded in an understanding of the underlying agreement, including a grasp of the business which is the subject of the agreement and of the relationships between the parties. Only then, can an attorney experienced in arbitration law and practice, make use of the wealth of Alternative Dispute Resolution tools available today to draft a clause appropriate to the business and the relationships.