Whether the parties are already in dispute or they simply want to lay the ground rules in advance, a strong arbitration agreement should provide them with a dispute resolution process that minimizes time and expense while ensuring each party's interests remain well protected. The following information provides additional details on some of the key aspects of the agreement.
The first question will help to determine the appropriate dispute resolution rules to apply in your agreement. One size does not fit all when it comes to dispute resolution. For instance, the resolution process for disputes among construction industry professionals is different than for disputes between a labor union and a business.
Each option has its own set of rules provided by the American Arbitration Association (AAA), which are available for review at any time on its website. You may also choose to leave the rules unspecified and allow the mediator or arbitrator to determine the most applicable set of rules to apply.
Here you will indicate whether the parties are signing this agreement in order to set up a resolution process for an existing dispute. When prompted, provide details on the nature of the dispute. This should be a general statement that both parties agree to.
This agreement sets up a typical alternative dispute resolution process for parties seeking to resolve disputes outside of court. The dispute process has three stages: 1) voluntary negotiation, 2) voluntary mediation, and 3) mandatory or voluntary arbitration (depending on your answer).
In this context, "voluntary" means that both parties have to agree to it for it to occur. Therefore, the first two stages can be entirely skipped if either party chooses to opt out. However, each stage gets more time consuming and expensive than the previous one, so it is usually in the parties' best interests to proceed in order.
Voluntary negotiation is simply informal negotiation between the parties. The parties usually decide on a time, a location, and discussion points beforehand, and then the relevant personnel meet along with any attorneys or representatives in order to try to reach a resolution.
Voluntary mediation is more structured, and the AAA has specific procedures for conducting it. A neutral mediator is selected to help the parties reach a resolution, but they do not have the power to issue a binding judgment or award on the dispute.
If you choose to make arbitration voluntary, then both parties must agree in order to start the proceedings. However, once the parties agree to submit to arbitration, or if you choose to make arbitration mandatory, then the ruling of the arbitrator will be final and binding. If a party refuses to cooperate with a ruling, then the other party can enforce the judgment in a court of law (and also recover any legal fees and costs for having to do so).
In some situations, a party may need a fast or immediate ruling in order to stop the other party from infringing on its rights or protect its property. In this case, that party can either apply to a court for an injunction or preliminary relief, or, if arbitration is mandatory, it can apply to have an emergency arbitrator appointed by the AAA who will follow the AAA emergency rules to provide relief for the party.
Most commonly, parties sign this agreement in relation to a contract between them. However, these agreements are sometimes used to cover disputes that relate to the parties' relationship. For instance, parties may wish to use this agreement for their ongoing business or other relationship, such as employer and employee, service provider and service receiver, labor union and business, etc.
You may also want to use this agreement in relation to an activity or event or even multiple activities or events. This can include any potential scenario where disputes may occur, but it most typically involves events where at least one of the parties is acting in an individual capacity rather than as a business.
To execute the agreement, simply have each party sign in the signature section where indicated. Make sure that each party gets a copy of the signed agreement for safekeeping.
The American Arbitration Association (AAA) is a not-for-profit administrative organization that has a long history of providing mediation and arbitration services throughout the United States.
LegalNature's agreement is set up to allow the parties to use the AAA's services, and we recommend that you take advantage of the AAA's experience and expertise to help resolve your disputes. Their fees for mediation and arbitration services are available on their website, with mediation normally being the least expensive alternative. With arbitration, note that the AAA can provide expedited proceedings (called "desk arbitration") under certain circumstances.
That said, both parties can always agree to use another administrative organization (such as USA&M) or an independent mediator or arbitrator. However, doing so may leave the parties without a predictable process for resolving their dispute.
Although not required to do so in order to use their services, it is recommended that dispute resolution agreements be registered with the AAA. Upon registration, the AAA will review your agreement to make sure it complies with their standards. This will help expedite the dispute resolution process.
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