Enforcing Arbitration Provisions
Many contracts between businesses contain arbitration provisions, where the parties agree that if a dispute should arise, it will be resolved through arbitration. Sometimes when disputes arise, one party will not want to go before an arbitrator or will disagree that the type of conflict is one bound by the arbitration provision. Whatever the reason may be, there are laws that guide whether the contract provision should be followed and enforced.
Whether There Should be Any Arbitration
If one party does not want to submit a dispute to arbitration, the other party may petition the court to compel arbitration under the agreement. The court will then decide whether one of the following applies:
- whether there is an agreement to submit the dispute to arbitration;
- whether there are any valid defenses to the enforcement of the arbitration provision; and
- whether the arbitration provision is enforceable.
If one party opposes arbitration but the other party does not take steps to compel the arbitration, the right to compel arbitration will be waived.
Except in certain very limited circumstances, a person who was not a party to a contract containing an arbitration clause cannot be compelled to participate in arbitration.
An arbitration clause is likely to be found invalid if there was fraud in the inducement of the overall contract or if enforcement of the arbitration clause would be unconscionable.
Which Claims Are Covered by Arbitration Provisions
Courts are often also asked to decide which claims are covered by arbitration and which are not. To make this determination, a court will identify the issue and then determine whether it is within the scope of the contractual arbitration clause.
Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. Contact us at (310) 277-7747 to see how we can help you with any business dispute concerns you may have.