What Is Mandatory Arbitration?

Have you ever been through mandatory arbitration or has a court directed you to go through mandatory arbitration? In the past, we covered generally what arbitration is, but in this article, we will specifically look at mandatory arbitration. To refresh, arbitration is an alternative to litigation. Arbitration involves an independent person, known as an arbitrator, deciding a dispute between two parties. The arbitrator’s decision is called an award, which will be enforced by the Court, much the same as a judge’s decision will be.   

What is it?

Mandatory arbitration is when a court directs two parties to arbitrate, regardless of whether they change their mind and no longer want to. A court will do this when there is a clause within the contract, known as an arbitration clause, stating that both parties agree to arbitrate when irreconcilable issues arise.

Who runs the mandatory arbitration?

In most cases, the arbitration clause will state who is going to arbitrate. However, the clause can also state that parties will agree to who will arbitrate at a later date. This is an agreement to agree clause. If the arbitration clause does not include either one, then the arbitration clause most likely will not apply.

Can a court order arbitration?

A court will not order arbitration specifically, but it can order parties to use alternative dispute resolution. Arbitration is a form of alternative dispute resolution, but it is not the only one. Conciliation and mediation are other forms of it. When courts order parties to commence alternative dispute resolution, the intention is for parties to negotiate their differences. If this fails, then the parties will return to the court to litigate their dispute.

What if you do not want arbitration?

Before signing any contract make sure you or your lawyer checks for an arbitration clause. If there is one, check if it has been drafted correctly. If it has, then you will need to go to mandatory arbitration.

Courts enforce mandatory arbitration when the contract between the two parties has a properly drafted arbitration clause. If an arbitration clause exists in a contract you are reviewing or if you want to draft one, you should seek legal advice.  

Don’t know where to start? Contact us on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest lawyer marketplace.


Most Popular Articles
You may also like
Recent Articles

Get the latest news

By clicking on 'Sign up to our newsletter' you are agreeing to the Lawpath Terms & Conditions


Register for our free live webinar today!

Price of Justice: Paying the Right Price for Legal Expertise

12:00pm AEDT
Tuesday 30th April 2024

By clicking on 'Register for webinar' you are agreeing to the Lawpath Terms & Conditions

You may also like

In response to the COVID-19 crisis the government has introduced the Jobkeeper and Jobseeker payment schemes. FInd out in this articles whats right for you.
Resigning from your job isn't always an easy thing to do. Create your free Letter of Resignation (Company) by using our sample.
Exclusivity agreements in employent contracts try to balance the interests of the business while respecting the freedom of a person's right to work and earn a living. In this article, we'll look at how they work and when they can be unfair.

Thank you!

Your registration is confirmed. Keep an eye on your inbox for an email with details on how to watch the webinar.