What Is Agreement to Arbitrate

Agreement to Arbitrate: Understanding the Basics

Agreement to arbitrate is a legal concept that enables parties to resolve disputes outside the courtroom. In essence, it is a contractual agreement between two or more parties to submit any future legal disputes to a neutral third party for resolution in a private arbitration proceeding. This article will explore the basics of agreement to arbitrate and the key considerations businesses and individuals should take into account.

What is an Agreement to Arbitrate?

An agreement to arbitrate is a contract that two or more parties enter into, agreeing to resolve disputes through an arbitration process. The agreement can be made before or after a dispute arises, and can cover all disputes or specific types of disputes.

In general, an agreement to arbitrate will specify the rules, procedures, and qualifications for the arbitration process, such as the number of arbitrators, the type of evidence that can be presented, and the location of the arbitration. This allows the parties to determine how the dispute will be resolved before it ever arises.

The Benefits of Agreement to Arbitrate

Agreement to arbitrate has several benefits over traditional litigation:

1. Faster Resolution: Arbitration is typically faster than litigation, as it does not involve the lengthy discovery process and appeals that can prolong litigation.

2. Lower Costs: Arbitration is often less expensive than litigation, as it can be completed in a shorter time period and does not require as much preparation.

3. Confidentiality: Unlike litigation, arbitration proceedings are confidential, which may be particularly important in cases involving sensitive information or trade secrets.

4. More Control: The parties have more control over the arbitration process, as they can select the arbitrator and the rules that will be followed.

5. Finality: The decision made by the arbitrator is typically final and binding, with limited rights to appeal.

Key Considerations

Despite its advantages, agreement to arbitrate may not be appropriate for all disputes. Here are some key considerations for businesses and individuals:

1. Choice of Law: The parties need to agree on the governing law of the agreement to arbitrate, as this can impact how the parties will be treated under the agreement.

2. Arbitrator Selection: The parties should carefully select the arbitrator, as the arbitrator`s qualifications, experience, and impartiality can impact the outcome of the dispute.

3. Waiver of Rights: The parties should understand that by agreeing to arbitrate, they are waiving their right to a jury trial and other legal remedies.

4. Costs: Although arbitration is generally less expensive than litigation, the parties need to consider the costs of the arbitration process and the potential liability for legal fees.

5. Limited Appeals: The parties should be aware that the decision made by the arbitrator is typically final and binding, with limited rights to appeal.


Agreement to arbitrate is a powerful tool for resolving disputes outside of the courtroom. It offers a faster, less expensive, and more confidential alternative to litigation, and allows parties to have more control over the dispute resolution process. However, it is not appropriate for all disputes, and parties should carefully consider its advantages and disadvantages before entering into an agreement.