Asymmetric Arbitration Agreement
An asymmetric arbitration agreement is a legal document that outlines the process for resolving disputes between two parties. This type of agreement is considered to be one-sided because it usually favors one party over the other. In many cases, the party who drafted the agreement has more power, resources, and influence than the other party. As a result, the other party may feel that they have little choice but to agree to the terms of the agreement.
The main purpose of an asymmetric arbitration agreement is to protect one party from the threat of legal action or a lawsuit. By including this clause in a contract, the party who is most at risk can avoid costly and time-consuming litigation. Instead, if a dispute arises, both parties must agree to a binding arbitration process. This means that an impartial third party will make a final decision on the dispute. The decision of the arbitrator is final and binding, and as such, there are no further legal recourses available.
The main criticism of asymmetric arbitration agreements is that they are often unfair to one party. The party with more resources and bargaining power may use it to draft the agreement in their favor. This can make the other party feel that they have little choice but to agree to the terms. In addition, the asymmetric clause may deny the less powerful party the opportunity to contest individual issues in court, something which they may have been able to do without the inclusion of the clause in the agreement.
It is important to note that asymmetric arbitration agreements are not always one-sided. In some cases, both parties may have agreed to the asymmetric clause as part of a mutual understanding that protects them from lengthy and costly litigation. In this context, both parties benefit from avoiding the possibilities of a court case. It is essential, therefore, to examine every case to see if the asymmetric arbitration agreement was negotiated in good faith and the parties understood the terms.
In conclusion, the use of asymmetric arbitration agreements is prevalent in many industries. They are often included in contracts to protect one party from costly litigation. However, they can be disadvantageous to the less powerful party and give undue influence to the party with more resources. It is important to examine each case to ensure that the agreement was negotiated in good faith and that both parties understand the terms. In general, symmetric arbitration agreements, which are more balanced, are typically preferred for fairness’s sake.
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