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Arbitration Clause Is Key To Successful Arbitration

Connecticut Law Tribune

July 26, 2011

Authors: Frederick S. Gold

It is all the rage these days to complain that arbitration has become too much like litigation. Arbitration takes too long. It is too expensive. It involves too much discovery. It requires too many briefs. It takes too much time to schedule a hearing and too much time to get a decision. It has acquired all the detriments of court litigation but without the right to appeal. Complaints of this sort abound.

In many respects, such complaints are valid. At least they accurately reflect the reality of how many arbitrations are conducted these days, under the governance of various sets of rules used by many arbitration providers.

But those rules are creatures of contract. They apply only because the arbitration covenant in the parties’ underlying agreement -- or the arbitration covenant upon with the parties agreed after the dispute arose -- say they shall apply. Parties are free to agree on different rules. There are actually many options in the marketplace for streamlined or modified rules that eliminate many of these problems. Further, the parties are free to modify any set of arbitration rules in a way that eliminates unwanted elements. The parties’ arbitration agreement, whatever its particulars, must be enforced as written.

But there are at least three fundamental problems with application of the theory that arbitration procedures may easily be adapted to suit the parties’ purposes. First, it is not always true that, when the parties’ business deal (which includes the arbitration clause) is reached, the parties or their lawyers are able to know what kind of arbitration will be best suited for a future dispute. 

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