Bespoke tailoring or off-the-rack misfits for arbitration systems?

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By Dianne LaRocca

Much has been written following the Supreme Court’s decisions in AT&T Mobility LLC v Concepcion, Oxford Health Plans, LLC v Sutter and American Express Co v Italian Colors Restaurant. Yet, in this crowded field, there is a need for clear thinking on the most pragmatic issues: deciding whether to adopt arbitration and, if so, how to draft pre-dispute mandatory arbitration agreements.

The threshold question is whether your organisation should have arbitration agreements. Some employers adopt arbitration agreements without a considered cost-benefit analysis of whether its advantages (e.g. reduced costs, faster resolutions, greater privacy, no jury, increased predictability, etc) will be realised. Others do this analysis but then fail to tailor arbitration to meet their organisation’s needs. As a result, there are employers who have been disappointed to discover that their arbitration systems yield a greater number of claims, significant expenses, no guarantee of arbitrator expertise and no effective appellate review of unsatisfactory arbitration decisions.

More sophisticated analysis and a deeper appreciation for the flexibility of arbitration can avoid those disappointments. Here are the key questions to start determining what type of arbitration agreement (if any) fits best for your organisation…

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