The law allows you to use arbitration clauses in contracts and business contracts, but it is up to you whether to enforce them.
Here are five ways to avoid being charged with an arbitration clause in your business contract.
You can’t refuse to arbitrate.
The legal definition of an arbitration contract is: an agreement between two or more parties whereby one party agrees to arbitral proceedings, in which they can seek to resolve disputes in a neutral manner.
You cannot opt out of an agreement by saying no to a particular clause or by refusing to pay any fees.
An arbitration clause is enforceable, even if you do not sign it.
However, there are some situations where an arbitration provision could lead to an unfair advantage for your competitors.
For example, an arbitration agreement could restrict your competitors from negotiating with you on their terms.
Arbitrators cannot be fired.
If you choose not to arbitratate a contract, you cannot be terminated or disciplined by the courts.
However you can be charged with breach of contract if you fail to comply with a clause that restricts your competitors’ ability to negotiate with you.
If your competitors are unable to negotiate, your competitors will not be able to offer you a better product.
You have to give your competitors a fair opportunity to negotiate.
An arbitrator must give you fair and equitable treatment in any arbitration proceeding.
You are not allowed to be punished for failing to provide the services you are entitled to receive.
If an arbitrator decides that you are in breach of the arbitration agreement, you must compensate your competitors for any damages caused by your failure to comply.
You must provide your competitors with an explanation of why you are being discriminated against.
The term ‘discrimination’ has a broad meaning.
You do not have to provide an explanation, however, if you think the discriminatory behaviour of your competitors is likely to cause you harm.
If, after giving your competitors an explanation about why you were being discriminated, you decide not to enforce the clause, you may be liable to pay compensation to your competitors, including any legal fees.
If there is a clause about the right to withdraw, you need to make sure you have it.
An agreement in a business contract cannot contain a clause limiting the right of your competitor to withdraw from the contract.
This means that the arbitrator can make an order to withdraw your business from the agreement.
You should ensure that your contract contains a clause allowing you to withdraw.