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What ADR Arbitration Agreements Should Cover

Thursday, May, 5, 2011


ADR arbitration stands for "alternative dispute resolution.”  ADR has been growing in popularity for years as businesses, governments, and individuals increasingly understand that litigation is both slow and costly.  Another reason for its increased use is the fact that many companies are now including mandatory arbitration clauses in their contracts.  This is a common practice in real estate transactions, for example.   

 

ADR Arbitration: Common Contract Language

 

It is important for contracts to set up arbitration in some detail so that both parties to the contract understand the role and limits of arbitration in their particular case, for example a copyright arbitration.  One common contract element is called "choice of law.”  This clause will explain which state's laws will hold sway over any disputes that arise.  This can be essential if the two parties in dispute reside in separate states.

 

Another important clause involves location.  The contract may spell out where arbitration proceedings will take place.  Consumers should take care that the location is one that suits them.  A large corporation with headquarters in New York may prefer to carry on all arbitration there, but this may not be convenient for consumers who reside in Seattle or Hawaii.

 

Timeline clauses may set deadlines for deciding upon specific arbitration attorneys or for conducting investigations related to the dispute.  Another common clause involves the number of arbitration attorneys who will decide the case.  It is common to have only one, but some contracts require the use of several.