QUESTION
Do I have to accept Commercial Arbitration Rules of the (“AAA”) in my contract?
Asked on Mar 06th, 2021 on Business Law - Florida
More details to this question:
I am discussing for a contract and the other party which is a lawyer firm asked me if I agree then to accept the following: "Any party that files a claim or a counter-claim arising out of terms of this Engagement Letter or out of the Firm’s representation of the Client shall have the option to do so before a court of competent jurisdiction or in arbitration before the American Arbitration Association (“AAA”). Any claim filed with the “AAA” shall remain in arbitration. If a claim or a counter-claim is filed in a court of competent jurisdiction, the party responding to the claim or counter-claim may remove the entire action to the “AAA” for arbitration." "Unless the Parties otherwise agree in writing, all arbitrated claims shall be resolved under the Commercial Arbitration Rules of the (“AAA”) in force at the time of the filing of the arbitration". What does this mean for me? Is this something that also can help me or is it good only for the other side? Thank you.
1 ANSWER
First of all, you don't have to accept it, but you may not be able to reach an agreement if you don't.
Second, sometimes arbitration forums tend to favor one side or the tother, but the AAA is generally pretty neutral. Arbitrations are generally (not always) faster, less formal, and less expensive than llawsuits, but the costs are more front loaded. In llawsuits, by far the most expenses are incurred in preparing for and having a trial, and you have a lot of time between starting a case and reaching that most expensive point to reach a settlement. Frankly, a lot of cases settle when the parties get tired of funding the lawsuit. In arbitration, altho9ugh it is ultimately cheape in general, you start paying big money much sooner. The other issue with arbitration is that you give up your right to appeal, because an arbitration award can only be reversed on very narrow grounds, which happens very rarerly.
Answered on Mar 06th, 2021 at 6:08 PM