The Missing Link in Commercial Contracts: Customized Arbitration Procedures

Arbitration agreements are quite common in commercial contracts, largely because of the perception arbitration is a more efficient, cost effective, private, and reliable process than litigation.  To obtain these benefits, parties should agree to specific procedures for their arbitration, rather than relying solely on standard clauses that merely stipulate arbitration will be administered by  an organization, such as the American Arbitration Association (AAA), and will be governed by that organization’s rules. 

While the AAA is a competent organization with reasonable rules, parties are more likely to get the arbitration they want – quick, cheap dispute resolution – if they take time to draft an arbitration agreement that stipulates such matters as a deadline for a final award, a reasonable schedule for proceedings, limitations on discovery, and the manner of submission of arguments and evidence.