Arbitration agreements should always be fair to both parties. As with any type of legal document, both parties to an arbitration agreement should read it carefully and understand what they are agreeing to.
When negotiating an arbitration agreement, these provisions can help to make it more fair and balanced:
- Choice of arbitrator – Choosing the arbitrator(s) who will hear and decide a dispute should not be one-sided. Instead, both parties should agree on the arbitrator(s), who should be neutral and free from potential conflicts of interest. Often, the selection procedures are determined by the governing rules stated in the agreement, for instance the American Arbitration Association (AAA).
- Costs – The arbitration agreement should spell out who is responsible for paying the costs of arbitration. In cases like employment situations where the employer holds more power in the relationship, the employer should be the party paying for arbitration.
- Representation – Both parties to an arbitration agreement should have the right to legal representation, and the agreement should not waive that right.