Arbitration for Small & Medium-Sized Business: 5 Reasons to Include Arbitration Clauses in Your Agreements


By Brent Meckling

Business disputes are often an unwelcome disruption to owners, often leading to financial losses, damaged reputations, and a decrease in productivity. This can be particularly damaging for small and medium-sized businesses where owners may not have the resources to absorb the costs associated with legal disputes. Resolving these issues quickly and effectively is crucial, which is why business owners will often prioritize prompt resolutions through mediation, arbitration, or litigation.

Most business owners have heard of arbitration, but may not have a clear understanding of what it is and the benefits it offers.

Arbitration is essentially a private court like process for resolving contract disputes of all kinds.

The decisions of arbitrators (who are normally experienced lawyers) can be enforced by the successful party just like any court judgment.

Arbitrations usually occur because the parties have agreed to such a process in their contract.

Here are 5 reasons to include an “arbitration clause” in your agreement:

  1. The process is private and confidential and, unlike lawsuits in the regular courts, the public will have no access to the evidence and subject matter of the dispute.
  2. Arbitrations usually move at a faster pace than traditional lawsuits and result in quicker decisions.
  3. Arbitrators can make all the same kinds of orders as a judge, such as monetary awards and freezing orders or injunctions.
  4. The parties can agree to appoint an arbitrator with specialized knowledge or experience to resolve complex technical disputes.
  5. Arbitration clauses will generally prevent a non-BC based party from avoiding the process by making “jurisdictional” arguments.

Arbitration clauses can be added to new or existing agreements with the help of a lawyer. The wording of the clause is essential because it can significantly impact the enforceability and fairness of the arbitration process. An experienced lawyer can ensure that the clause is properly worded to comply with the relevant laws and regulations, as well as to accurately reflect the intentions and goals of the parties involved.

Additionally, a lawyer can help business owners choose the most appropriate arbitration forum, arbitrator, and rules for the dispute resolution process which are essential for ensuring a fair and impartial process. The impact of using the correct language will also determine the scope and limitations of the arbitration process, as well as the parties’ rights and obligations throughout the process. The clause should be clear and specific, avoiding ambiguous or confusing language that could lead to disputes or legal challenges.

With decades of experience, our lawyers are well-versed in the drafting and enforcement of arbitration clauses and are highly skilled in conducting arbitrations. If you have questions about how to incorporate arbitration clauses into your agreements or need help with resolving business disputes through arbitration, please reach out to any member of the Business Litigation team and they will be happy to assist you.