When the Arbitration Agreement Shall Be Made in Writing

When the arbitration agreement shall be made in writing

Arbitration is a method of resolving disputes outside the traditional court system. It is a private, binding process where a third-party arbitrator hears both sides of the dispute and makes a decision.

One of the most important aspects of arbitration is the agreement between the parties to resolve the dispute through this process. This agreement is known as the arbitration agreement, and it can be verbal or in writing. However, there are certain circumstances where the arbitration agreement shall be made in writing.

The Federal Arbitration Act (FAA) governs arbitration agreements in the United States. According to the FAA, a written arbitration agreement is required for any transaction involving interstate commerce. This means that if the dispute involves goods or services that cross state lines, the arbitration agreement must be in writing.

In addition to interstate commerce, there are other situations where a written agreement is required. For example, some states have laws that require arbitration agreements in certain types of contracts to be in writing. These contracts may include employment agreements, consumer contracts, or construction contracts.

Even when a written agreement is not required, it is highly recommended to have one. A written agreement can help minimize disputes about the terms of the agreement and ensure that all parties have a clear understanding of what is expected of them.

When drafting a written arbitration agreement, there are certain elements that should be included to make it enforceable. The agreement should clearly state that the parties agree to arbitration as the method of resolving disputes. It should also outline the specific issues or claims that will be subject to arbitration. Additionally, the agreement should identify the arbitrator or arbitration service that will be used.

It is important to note that the language used in the agreement can affect its enforceability. The agreement should be clear and unambiguous, and the terms should be understandable to all parties. Additionally, the agreement cannot waive any statutory rights or protections.

In summary, the arbitration agreement must be made in writing when the dispute involves interstate commerce or is subject to state law requiring a written agreement. Even when a written agreement is not required, it is highly recommended to have one. When drafting a written agreement, be sure to include the necessary elements and use clear and unambiguous language.