Arbitration agreements are common in business contracts, employment agreements, and consumer services contracts. An arbitration agreement is a legal document that requires disputes to be resolved through arbitration rather than litigation in court. Arbitration is a private, informal process in which an independent third-party arbitrator hears both parties` arguments and evidence and issues a binding decision. However, not everyone can be bound by an arbitration agreement, and some parties may be excluded from its provisions.
When drafting arbitration agreements, it is important to be clear about who is bound by its provisions and who is not. Typically, the arbitration agreement will specify that all parties to the contract are bound by arbitration, but there may be exceptions. One common exception is the inclusion of a clause that states, “The arbitration agreement shall be binding on the following except.”
This clause generally lists the parties that are not bound by the arbitration agreement. This may include:
1. Third-party beneficiaries: If the contract has third-party beneficiaries, they may not be bound by the arbitration agreement. For example, if a construction contract has a provision for arbitration, but the owners of the property are not signatories to the contract, then they may not be bound by the arbitration agreement.
2. Government agencies: Government agencies may be exempt from arbitration agreements because they have certain legal rights and obligations that cannot be waived or modified by private parties.
3. Claims under a certain dollar amount: If the arbitration agreement specifies a minimum dollar amount for claims to be heard in arbitration, claims under that amount may not be subject to the agreement.
4. Claims for injunctive relief: In some cases, parties may be excluded from arbitration if the dispute involves claims for injunctive relief, which is a court order that requires a party to do or refrain from doing something.
5. Claims for intellectual property disputes: Intellectual property disputes such as patent infringement, trademark infringement, and copyright infringement may not be subject to arbitration agreements.
It is important to note that the inclusion of an “except” clause in an arbitration agreement does not invalidate the entire agreement. The parties that are bound by the agreement will still be required to resolve their disputes through arbitration. The “except” clause simply clarifies who is not bound by the agreement.
In conclusion, when drafting arbitration agreements, it is essential to be clear about who is bound by the agreement and who is not. The inclusion of an “except” clause can help clarify who is not bound by the arbitration agreement and can ensure that the parties understand the scope of the agreement. As an experienced copy editor, it is crucial to pay attention to the details of these agreements to ensure that they are legally sound and properly executed.
