Drafting Arbitration Provisions: Tried & True Best Practices

• Published date: 09 December 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Butler Snow LLP
• Author: Sarah Rawls

"An ounce of prevention is worth a pound of cure." Benjamin Franklin's statement has reverberated for centuries in a variety of circumstances, and has enjoyed widespread use among attorneys, in particular. This especially holds true for attorneys tasked with drafting agreements or provisions designed, in part, to provide information on the front end that will govern future disputes.

An arbitration provision (or stand-alone agreement) is a perfect example because it is designed to make clear what forum'as between arbitration or a court of law'that parties agree to submit certain disputes to before an applicable dispute arises.

Typically, disputes about arbitration provisions arise after a lawsuit has been filed. The party seeking to enforce the arbitration provisions may be entirely reliant on how the agreement was drafted. Below are a few "best practices" that attorneys can implement when drafting arbitration provisions in order to prevent future headaches.

Emphasize Key Points

One of the first issues a court considers when deciding a motion to compel arbitration is whether the parties agreed to arbitrate the dispute. To ward off potential arguments that a plaintiff did not know he/she was submitting to arbitration or did not know material terms, drafting attorneys should bold, underline, and/or CAPITALIZE material terms.

The goal is to clearly inform the individual to be bound that he/she is agreeing to submit claims to an arbitrational forum. Courts appreciate the embellishment, especially when the agreement is contained in an otherwise lengthy document.

Designate Methods of Acceptance

Additionally, drafters of arbitration provisions should clearly designate the method by which an individual may accept the terms of the agreement. If a signature is all that is required, state whether the signature may be electronic or wet ink'or both, where one is just as effective as the other.

In the employment context, an arbitration agreement'even one unsigned'may be enforceable under the Federal Arbitration Act where an employee's acceptance is expressly made contingent upon beginning or continuing employment. The Eleventh Circuit Court of Appeals has found that an employee accepted the arbitration policy where the policy provided that acceptance of employment or the continuation of employment by an individual shall be deemed to be acceptance," "no signature would be required for the policy to be applicable," and "the policy would be a condition of continued...