Arbitration is a popular alternative to litigation for resolving disputes that arise between parties in various contractual situations. An arbitration agreement is a legally binding contract that outlines the terms and conditions for arbitration. This article will provide insight into the form and constituents of an arbitration agreement.
Form of an Arbitration Agreement
An arbitration agreement may be in written or oral form. However, written arbitration agreements are preferable to oral agreements because they provide clear evidence of the parties` intention to arbitrate. Additionally, written arbitration agreements ensure that the parties understand the terms and conditions of the arbitration, which reduces the likelihood of disputes arising during the arbitration process.
The written arbitration agreement must be signed by both parties. The signature serves as evidence that the parties have agreed to the terms and conditions of the arbitration agreement. Additionally, the parties may choose to include clauses that specify the governing law, the place of arbitration, and the language for arbitration.
Constituents of an Arbitration Agreement
An arbitration agreement should include several essential components, which include the following:
1. Agreement to Arbitrate
The first constituent of an arbitration agreement is the agreement to arbitrate. This section clearly states that the parties agree to use arbitration as a means of resolving any disputes that may arise during the contractual relationship.
2. Scope of Arbitration
The scope of arbitration clause outlines the types of disputes that the parties agree to arbitrate. This section is essential to ensure that both parties understand the nature of the arbitration and what disputes are covered.
3. Governing Law
The governing law clause specifies the law that will govern the arbitration agreement. This clause provided clarity on the law that will be used to interpret the arbitration agreement.
4. Place of Arbitration
The place of arbitration clause specifies the location where the arbitration proceedings will take place. This clause is essential because it aids in determining the jurisdiction that will be responsible for enforcing the arbitration award.
5. Language for Arbitration
The language for the arbitration clause specifies the language that will be used during the arbitration proceedings. This clause is essential to ensure that all parties understand the proceedings and can participate effectively.
Arbitration agreements are an essential component of contractual relationships. It is essential to ensure that the agreement includes the necessary constituents outlined above to avoid disputes and provide clarity on the arbitration terms and conditions. As a professional, it is important to ensure that the language in the arbitration agreement is clear, concise, and SEO-friendly.