Clause guide
Arbitration Clause clause: meaning, risks, and what to negotiate
Requires disputes to be resolved through arbitration instead of court.
What it means
Arbitration clauses remove the ability to go to court and instead require private dispute resolution.
Common risks
- • Arbitration may limit appeal rights.
- • Costs may be higher than expected.
- • The arbitrator selection process may favor one side.
What to check before signing
- • Who selects the arbitrator?
- • Which arbitration rules apply?
- • Where will arbitration occur?
Negotiation ideas
- • Specify a reputable arbitration institution.
- • Require neutral arbitrator selection.
- • Split arbitration costs evenly.
Example clause
“All disputes arising from this Agreement shall be resolved through binding arbitration under the rules of the American Arbitration Association.”
Frequently asked questions
Can arbitration decisions be appealed?
Usually only in very limited circumstances.
Related clauses
Want help reviewing the full contract?
A single clause rarely tells the whole story. Scan the full agreement to spot risks, missing protections, and negotiation points across the whole document.