Too Much Arbitration??!!

March 1, 2010 W. R. Eilers No Comments

As a transactional attorney by trade, I have my biases.  I like arbitration.  In a “free market” version of commerce, (one that we at least pretend we use), the concept of resolving disputes through channels more related to the actual the substance of a contract is simple more appealing than the prospect of having a trier of facts that is simply applying the law while trying to make sense of the technicalities and trade uses of a certain contract of goods between parties in various jurisdictions.  I also applaud the value of choice as it relates to the intended use and governance of parties involved.  That being said, I recently came across this article in the Florida Bar Journal.  The general gist points to the inevitable entry into the court systems.  The author’s points are absolutely valid.  However, I cannot help to remain true my biases.  So what does this mean?

DON’T JUST DRAFT AN ARBITRATION CLAUSE

In this modern world of legal practice where attorneys tout their template folders and depend on the Prodocs and the like, the modern attorney has become the “professional” stamp on cut and paste contracts. Although there are hints of a weary public, the fact remains that as attorneys, they are still the most qualified and most willing to accept liabilities for the interpretation and results of contracts. This lackadaisical approach to transactional practice is exactly what causes the troubles as described in the Florida Bar Journal article. The solution, the only solution to preventing or do your best to prevent these court house visits is actually drafting meaningful contracts. That means behaving like an attorney should. Assess the needs and desires of your client as they relate to potential litigation. That means talking to them!! Next you have to assess the actual effect of your decision. Choosing English law because it is neutral doesn’t make much sense if you are going to choose the American Arbitration Association as your judicial body, unless you are confident that there will be a panel selection that is sufficiently versed in English law. Lastly, consider the res of your contract in its entirety. A service contract may have elements related to goods or intellectual property. If a international treaty or governing set of rules is chosen, does it include the particular issues covered under the contract? If not, you should take steps to plug up the holes.

Remember a messy contract will almost undoubtedly lead to messy arbitration. Make your terms clear and respect the power of an arbitration clause!

arbitration, attorneys, choice of law, contracts

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