Arbitration agreements seem to permeate our society, though they often go unnoticed. Traditionally located in what is colloquially referred to as the “fine print,” arbitration clauses in contracts, or in use agreement or terms and conditions, can have a tremendous impact on a party’s right to bring an action before a court of competent jurisdiction. Without understanding the fine print, a party may unknowingly waive its right to a trial by jury and may be left to litigate before an arbitrator, which can be an individual or a panel, in a closed proceeding with a very narrow and difficult right to appeal the decision.
A preference for arbitration will vary and will usually fall to a party’s relative interests. For some, an enforceable arbitration agreement may be helpful, as it presents and expedited process and a non-public forum for dispute resolution. For others, this language may be harmful, as the costs of arbitration can be extremely burdensome relative to traditional court costs. The important thing is to understand what is included in the agreement and whether the language is effective in accomplishing that understanding.
Typically, courts have looked at these clauses with favor because they represent an agreement of the parties to bring disputes before an alternate forum. Recently, however, courts have taken a closer look at these clauses, specifically whether the language of the clause adequately demonstrates a “meeting of the minds” between the parties regarding both the scope and affect of the clause. This means that though favored, courts have and will scrutinize arbitration clauses prior to enforcement.
Recently, I argued a motion on behalf of a client and obtained a ruling invalidating an arbitration clause under New Jersey Law, in part, because the clause did not adequately advise our client that he was waiving his statutory right to a jury trial consistent with recent rulings of the Supreme Court of New Jersey. Additionally, I have successfully represented clients seeking to enforce an arbitration clause against an adversary attempting to violate the terms of an enforceable arbitration clause.
If you are a party to a contract or agreement that contains an arbitration clause, it is highly recommended that you consult with an attorney to understand the enforceability and affect of the agreement, regardless of whether you are subject to, or contemplating bringing a claim. As the law has evolved, the enforceability of your agreement may have been affected. Through drafting enforceable agreements and litigating matters thereunder, the attorneys at Stark & Stark are very familiar with these issues and would be happy to guide you through the process.