People unfamiliar with arbitration agreements often wonder if these agreements are mandatory—in other words, if they create any binding obligations.
Generally, arbitration clauses or agreements are indeed mandatory. They create a positive obligation to resolve potential disputes through arbitration and a negative obligation to avoid resolving disputes through national courts.
However, the mandatory nature of these agreements depends on several factors. First, the arbitration agreement must be validly concluded, and the dispute must be arbitrable under national laws. Additionally, the agreement should clearly express the parties’ intent to resolve disputes through arbitration. This may sound like a tautology, but it’s not—the arbitration clause must unambiguously state the parties’ agreement to use arbitration for dispute resolution.
Moreover, arbitration agreements shouldn’t be unconscionable, obtained through fraud or duress, or violate public policy.
While arbitration agreements are often enforceable, their mandatory nature can be challenged. The specifics depend on the jurisdiction, the nature of the dispute, and the circumstances under which the agreement was made. It’s advisable to consult with a legal professional for guidance on specific situations involving arbitration agreements.
