California Civil Code Arbitration Agreement: What You Need to Know
In California, arbitration is a common method of resolving disputes between businesses and individuals. Rather than going to court, parties can agree to submit their dispute to an arbitrator who will make a final decision that is binding on both parties. If you are drafting an agreement that includes an arbitration clause, it is important to understand California`s rules regarding arbitration and how they can impact your agreement.
The California Civil Code governs arbitration agreements, and it requires that certain rules be followed in order for an arbitration agreement to be considered valid. First, the agreement must be in writing and signed by the parties. Second, the agreement must clearly state that the parties are waiving their right to a jury trial. Third, the agreement must be written in clear and concise language that is easily understandable by the parties.
When drafting an arbitration agreement, it is important to consider a few key factors. First, you should carefully consider which disputes will be subject to arbitration. For example, you may want to exclude certain types of claims, such as claims for injunctive relief or claims that involve a party`s intellectual property rights. Second, you should consider who will act as the arbitrator. In many cases, parties will agree to use a neutral third party as the arbitrator, but it is important to make sure that the arbitrator is experienced in the relevant area of law and has no conflicts of interest. Finally, you should consider the process for selecting the arbitrator and how the arbitration will be conducted, including any rules or procedures that will be followed.
One important consideration when drafting an arbitration agreement in California is the requirement that the agreement be “unconscionable.” An unconscionable agreement is one that is so one-sided that it is fundamentally unfair to one party. For example, an arbitration agreement may be considered unconscionable if it requires one party to pay all of the costs of the arbitration, or if it limits the damages that a party can recover in the arbitration. When drafting an arbitration agreement, it is important to ensure that it is fair and reasonable for both parties, so that it will not be found to be unconscionable by a court.
Another important consideration is the enforceability of the arbitration agreement. In California, courts will generally enforce arbitration agreements if they meet the requirements of the California Civil Code. However, there are certain situations in which an arbitration agreement may not be enforceable. For example, if one party is forced to agree to the arbitration agreement as a condition of employment or as part of a contract of adhesion, the agreement may be considered invalid. Additionally, if the arbitration clause is buried in a lengthy contract and not clearly highlighted, it may not be considered enforceable.
In conclusion, if you are drafting an agreement that includes an arbitration clause, it is important to understand the rules governing arbitration in California. By carefully considering the factors discussed above, you can ensure that your agreement is fair and reasonable for both parties and is enforceable in court. If you have any questions about drafting an arbitration agreement, it is always best to consult with an experienced attorney.