Corporate & Securities Law

Tweaking Your Arbitration Clause

By Ken Adams

If you’re a fan of the litigation-versus-arbitration debate, you’ll find of interest this article on law.com. It’s from the Legal Intelligencer, and it’s by Gina Passarella.

The title says it all: “Litigators Losing Love of Arbitration Argue for Trials.” But what caught my eye was the suggestions made by those interviewed for the article regarding how you can attempt to limit any downside to arbitration by addressing certain issues in the arbitration provisions:

• require a nonjury trial in the event of a dispute, or at least specify a certain jurisdiction, preferably in federal court
• specify the number of hours or days each side will get to present their case
• limit the number of depositions each side is allowed, when documents should be turned over, and how many days of testimony there should be
• specify that the losing party pays for the other side’s costs

These suggestions serve as a reminder that whatever arbitration clause you use?the AAA standard arbitration clause, my redraft of it (see this PDF of my article on the subject), or something else?commentators on arbitration generally recommend that you supplement it.

But don’t expect unanimity on that score. One of those interviewed for Passarella’s article said that he doesn’t think it’s a good idea for clients to tailor their arbitration clauses to set some ground rules.

And don’t expect consensus on the pros and cons of arbitration. I’ve seen other articles suggesting that arbitration is becoming more trouble than it’s worth; see for example this 2007 New York Law Journal article.  But I also recall seeing this more-upbeat 2006 article from the Daily Business Review.

Full post as published by AdamsDrafting on September 01, 2010 (boomark / email).