When it is time to revise a contract you already have or when you sign a new one, one of the most important things you need to decide is whether to include mandatory arbitration rights or not. At times, this can be very useful in order to resolve disputes. So, if you have the liberty to make this decision, here are five factors that, if present in your contract, should be enough reason for you to opt for arbitration:
1. Consider this option if the issue is extremely technical in nature and it is important to have an industry professional to decide the dispute due to their familiarity and knowledge. A judge or jury might not be able to understand the technicalities completely.
2. If you want to keep the proceedings of the dispute completely confidential and don't want court filings to be made, arbitration is a good choice. However, in the event that any party moves to vacate, the proceedings of arbitration still might become part of court files.
3. Go for it if you want to avoid taking class actions in case of a dispute. When an arbitration agreement is made, such actions can be prevented, which might not be the case when there is no arbitration.
4. If other parties that are part of the contract are having arbitration provisions, you can also decide to have arbitration. In some cases, other parties might be bound to arbitrate. If you agree to arbitrate in such cases, you can avoid a lot of problems with claims in the future.
5. If there are chances that the judge would need to be enforced in a foreign court, arbitration is preferable. This usually happens when the assets of the losing party are located abroad.
In terms of cost and time, both arbitration and court cases almost match each other, so there is definitely no advantage if you are looking for speed and saving. Therefore, if you have one of the above factors to consider, you might consider going for arbitration or else you can also opt for litigation. If an unfair jury or strict rules are your concerns in litigation, you should be aware that you can get an equally unfair litigation agreement and the relaxed rules might be used by your adversary to their advantage.
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