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The Pitfalls of Arbitration Administrator Rules

By Charles F. Forer
December 31, 2013

Bob has made his share of mistakes when it comes to drafting arbitration clauses. His excuse: “The law keeps changing and I can't instantly catch up.”

At least Bob understands that parties go to arbitration to get a final and binding award that the prevailing party can turn into a judgment. Bob therefore drafts arbitration provisions that expressly provide for the entry of judgment on the arbitration award: “Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.” Without this magic language, the “award” could end up being nothing more than an advisory opinion. When you are in a franchisor-franchisee dispute, the last thing you want is to arbitrate the dispute and wind up with an “award” that is not final, that is not binding, and that cannot be entered as a judgment.

Here is what Bob customarily includes in the form contracts that he routinely drafts for his franchisor clients: “Any controversy or claim arising out of or relating in any way to this contract or the breach of this contract shall be settled by arbitration in accordance with the rules of the XYZ Arbitration Association. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.”

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