This article makes the case that business should use arbitration to resolve disputes.

The
key is to make the arbitration clause the screenplay or the musical score for the arbitration.
An artfully drafted arbitration clause will serve for arbitration the same purpose a good
screenplay or score serves a movie or a song: it guides and adds certainty to the entire
process.

What should an Arbitration Clause Include?

The arbitration clause should be a mix of positive and negative commands. Bing Crosby
would advise that, “You Need to Accentuate the Positive and Eliminate the
Negative” aspects of court litigation and set down those aspects of arbitration that attracts
business when drafting an arbitration clause.

Every arbitration clause should:

 Pick a set of Rules to govern the arbitration. Why fight over which rules should
govern the case after a dispute has broken out between the parties? Also, pick the
language for the arbitration in a multi-national transaction.
 Set a neutral venue for the hearing. This prevents you from being the
unwelcomed recipient of a Home Town tar and feathering committee.
 Mandate that expert witness direct testimony shall be in writing and that the
opposing expert witnesses shall be cross examined at the same time. Its better
to prefer all direct testimony to come in written form.
 Set a discovery/disclosure plan. Do not rely on the good nature of future company
representatives and trial attorneys to set up a discovery plan when they are in the
midst of a dispute.
 Set a limit to the number of depositions and their collective duration.
 Forbid or Limit Interrogatories and Requests to Admit. Quite often answers
given in response to Interrogatories and Requests to Admit are, as Sam Goldwyn
used to say when referring to oral contracts, “not worth the paper they’re written
on.” 
 Make the losing party to a dispositive motion pay the winning party’s attorney
fees. Any party thinking about bringing a dispositive motion will think more than
twice before bringing it.
 Forbid or severely limit opening and closing arguments. A little less
lawyering will attract business.
 Set a time limit for the proceeding and decision.
 Require a Preliminary Hearing and Case Management Order Within 14 days of
the Answer’s due date.  An in house counsel or business person must be present
for each party hearing.
 Require a Confidentiality Order. Arbitration is private, but not inherently
confidential.
 Set the number of arbitrators.
  Require mandatory evaluative mediation attended by the parties’ business
people as a precondition to discovery. But require the mediation not to interfere
with the arbitration schedule and be completed within 60 days of the selection of
the arbitrator(s).
 Require that the arbitrator’s decision will be based only on the pleadings,
evidence elicited from discovery and at the hearing, and the governing law.
 The arbitrator shall award attorneys’ fees and costs, including expert witness
expenses, to the substantially prevailing side.

More Reasons Why Business Should Prefer Arbitration to Litigation.

As much as business should prefer arbitration for what it is, it should like it even more for
what it is not.

Let us look at what arbitration is not. Arbitration does not have:

 Voir dire;
 Jurors;
 Endless sidebars;
 Jury instructions;
 Jury consultants;
 Mock jury trials; and
 Publicity.

Arbitration’s flexibility should make it the preferred method of dispute resolution. For
instance, Arbitration:

 Can be tailored to suit the parties, facts and issues.

 Is private, which is important in some cultures.
 Can be made confidential.
 Can be conducted in a professional manner and setting by professionals respectful
of business and their employees.
 Is not hamstrung by strict adherence to the time consuming and confusing Rules of
Evidence and Procedure.
 Uses knowledgeable, professional, and fully attentive arbitrators.
 Can be conducted in a business time cycle.
 Results in better witness availability. 

What about arbitration’s limited right to appeal?

The lack of the right to appeal an arbitrator’s decision is held up as the biggest reason to
avoid arbitration. Well, the vast majority of appeals filed in the court system fail.
Arbitration’s Future is Bright

An arbitration based on a well thought out arbitration clause is more likely to result in
timely justice than court litigation. In the minds of businesspeople most legal disputes are
cost centers and the sooner they end the better. Further, as the public justice systems of
large metropolitan areas continue to be cash strapped and forced to reduce employees and
services thereby lengthening the time it takes to get to trial, more businesses will opt for
the private justice system of arbitration and mediation.

Conclusion:  A good arbitration clause is good for business.

 Business is all about managing towards an objective standard, i.e. profitability, and that
includes reducing uncertainty caused by delays. A business wants disputes resolved
reasonably quickly and wishes the resolution of disputes to cause as little disruption to its
core business and employees as possible.

Failure to incorporate a business-oriented arbitration clause leaves too many decisions up

to parties mired in the midst of a dispute. It is better to create the framework (or
screenplay) for dispute resolution while the parties are in a cooperative mood, which is
often the case at the beginning of a contract. An arbitration clause should mandate and
prohibit certain behavior.  A good arbitration clause can foster timely justice.