Free Arbitration Agreement Templates & Forms (Word)

free arbitration agreement template 8

An arbitration agreement template is a clause in a longer contract. In this agreement, the parties agree to settle their dispute without going to court. The arbitration agreement is very common in employment and consumer contracts.

What does arbitration means?

Arbitration means a process of settling an issue without filing a lawsuit or going to court. In many ways, an arbitration process has similarities with a court case. Both include the services of lawyers, an exchange of information, and hearings. However, as compared to litigation, this process is a lot informal. Its procedure is much easier. The parties don’t have the authority to take information or documents from each other in an arbitration case. But, the arbitration letter or agreement is a most important document here.

Generally, for an arbitration hearing, the venue is usually held in a conference room rather than a courtroom. A retired judge, a lawyer, or someone who has experience for this specific industry can be the arbitrator.

The purpose of an arbitration agreement:

Lawyers often suggested arbitration to their clients. This is because it is the best and quickest way to resolve their claim. You submit your dispute to the arbitrator in arbitration. After that, when both parties have made their presentations, they will come to a resolution.

In most cases, your lawyer and the other party will make oral arguments on your behalf along with the documents you submit. There may also some situations where presentations may include witnesses. Here are some reasons for you that you should opt for arbitration with an arbitration agreement;

  • Both parties will agree on the arbitrator. The arbitrator is the individual that both parties have confidence in. You would feel more confident in such a case by signing the arbitration agreement template.
  • Since you can get a date for the arbitration a lot quicker than a court date so arbitration disputes get resolved much sooner.
  • Arbitrations are a lot less expensive. This is because the fee you pay to the arbitrator is much smaller as compared to the cost of paying witnesses to come to testify at a trial. Furthermore, you and the other party will divide the arbitrator’s fee equally in most cases. Also, the preparation of arbitration costs a lot less as compared to the preparation for a court trial.
  • Arbitration is a private process. This means you can keep the dispute and its resolution confidential if you or the other party desire privacy.
  • There will be very few chances for either of you to appeal when arbitration gets classified as binding. This indicates that the arbitration will be the end of the dispute. This provides finality that is not usually present in a trial decision.

How arbitration works in business?

In a business contract, you can include a clause which consists of a few lines. This clause would specify that both parties agree to settle disagreements outside of court. Along with signing an arbitration agreement, there are benefits and drawbacks so you must understand what an agreement entails. To map a resolution in case of dispute, these agreements are typically entered into prior to a business dealing.

Furthermore, while dealings among business entities, businesses, consumers, employers, and their employees, these agreements are used.

What happens when you don’t sign an arbitration agreement?

Employers usually ask their employees to sign an arbitration agreement. When you reject to sign, this may put your employer’s job at risk. In most cases, if you as a prospective applicant refuse to sign the arbitration agreement form then an employer might revoke their offer of employment.

In addition, as an employee if you refuse to sign, an employer can also terminate you. This indicates that a refusal to sign the agreement may put your employment at risk. However, there are some employers who will agree with this point. Particularly, when they feel more excited about taking you under their employment, then they are about arbitration. The employer may allow you to reject to sign any arbitration agreement examples instead of lose you.

Here are some pointers that you should think about when making negotiations;

Who to select as an arbitrator

Both parties should have as much say in selecting an arbitrator. You can’t get an opportunity to appeal any decision the arbitrator makes since you’re cognizant about the arbitrator’s power and the fact. When it comes to selecting the arbitrator, you want to have rights equal to those of your employer. Without having a valid reason, both you and your employer will have the same right to reject at least one arbitrator.

Information disclosure

It is very essential that the potential arbitrator must uncover information regarding their personal and business interests. In favor of your employer, this ensures that the arbitrator won’t get biased. For example, an arbitrator must be a stakeholder in your company. Both you and your employer have the authority to refuse an arbitrator who has any conflict of interest.

The cost of the arbitration

They should have to be the one to pay for the process since it is your employer who wants to use the arbitration process.

Available remedies

If your claim got filed in a court of law, you have to ensure that throughout the process, you should get all of the remedies that you should have obtained. For example, for emotional distress, punitive damages, and so on, the agreement must not protect you from seeking damages.

The right to a lawyer

Throughout the arbitration process, you shouldn’t lose the right to get represented by a lawyer. During dealing with these agreements, employees may find themselves in a tight spot. You so have the option not to sign an arbitration agreement particularly it is too skewed to your employer in terms of benefits. However, your employer can simply revoke their employment offer if you reject to sign.

You don’t feel certain about the agreement if your employer asks you to sign it. If they’re willing to negotiate the terms then you can always ask your employer.

Areas where an arbitration agreement can benefit a company:

It gives protection from class-action suits

A customer is less likely to file a lawsuit in case your company is selling something of minimum value. This is because it’s cost-prohibitive. While notifying customers of the possibility that they are eligible for damages then class action suits can be brought for these small amounts.

It allows a jury trial

Since individual people may have their own biases against corporations, individual customers, or employees so a jury trial would be exceptionally detrimental for a company. A judge or arbitrator can settle disagreements as per this contract.

Recovery of attorney fees

The losing party must pay the other party’s legal fees if you win the case. This clause in any event dissuades people from filing needless claims.

Wrongful termination and discrimination suits

An employee can’t bring suit for wrongful termination or discrimination if they sign this agreement. The process would not be in public court records in case the arbitrator found for the past employee.

The advantages and disadvantages of signing arbitration agreement:

The advantages:

  • A prospective employee who will not sign an Arbitration Agreement, employers will not hire them.
  • The resolution takes less time than court proceedings in case there is a dispute.
  • The agreement gives protection to the company or organization from litigation costs. Make sure that the arbitrator will be skilled and should be unbiased.
  • It would become difficult for the employees to find future employment who file suit against a previous employer. There’s no public record of a dispute without litigation.

The disadvantages:

  • An arbitration agreement won’t allow you to personally seek a settlement for wrongful termination in case you’re an employee working at a company. You might not want to waive this right in case you think that the employer did something unethical or illegal.
  • In case of dispute, jury gives more favor to the employee or consumer than large corporations or organizations.
  • In a formal court case where documents can be requested or subpoenaed, the records are more obtainable than with mediation.


In conclusion, an arbitration agreement template is an important tool used to deal with legal issues in order to keep such disputes out of court. This is an effective way to limit your legal fees. Also, you don’t have to attend the court hearings. Many businesses ask both employees and customers to sign an arbitration agreement.

Faqs (Frequently Asked Questions)

What are the types of arbitration agreement?

There are two different types of arbitration agreements;

Binding: This type of arbitration agreement specifies that the decision of an arbitrator is final. The parties have no right to go to court to settle the argument.

Non-binding: According to this, a party who isn’t agreed with the arbitration decision can bring the matter before a court.

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