How to Avoid Drafting a Really Bad Arbitration Agreement: PART 2  

Posted on: Wed, 01/15/2020

A well-constructed dispute resolution clause is the foundation of a cost-effective and efficient dispute resolution process. Yet courts regularly are faced with arbitration clauses that are problematic in some respect.

Common Flaw #2: Buried, Unrealistic, or Ambiguous Filing Requirements

A filing requirement can buried in the fine print of a dispute resolution provision or may be arbitrarily short or ambiguous.

Who’s on First?

An arbitration agreement states that prior to filing for arbitration, a party must submit “written documentation” to an unidentified “project manager or service delivery engineer” within 15 calendar days of the alleged performance breach. If the dispute is unresolved by then, “documentation” must be submitted to an unidentified “division vice president or CEO” within 25 calendar days of the alleged occurrence.

The intent of the boxed provision above is to speed up the dispute resolution process but actually creates the opposite effect, as parties attempt to sort out what actually is required and who is the recipient.

Practice Tip to Avoid This Mistake

Carefully consider whether deadlines are realistic as well as the consequences of missed deadlines. The best approach is to grant the arbitrator the authority to extend filing deadlines to provide parties additional time to comply.

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