How Does an Arbitration Clause Affect My Case?

Aditi Mukherji, JD

After suffering a personal injury, you may be required to participate in mediation or arbitration before you can head to court.

Many contracts routinely include arbitration clauses that require parties to arbitrate a dispute before filing a lawsuit.

What exactly are arbitration clauses and how do they affect personal injury cases?

Arbitration Clauses

Most arbitrations arise because of an arbitration clause in a contract, in which the parties have agreed to resolve any disputes arising out of the contract through arbitration.

Arbitration clauses can be simple, but they can also be very detailed and complex. For example, they may specify how arbitrators will be selected, where the arbitration will be held (which can be pricey if you live in another state), who will pay for attorneys’ fees, and whether the final arbitration award must be kept confidential.

Mandatory v. Voluntary Arbitration

An arbitration clause may make the arbitration mandatory or voluntary. If it’s mandatory, you must resolve the dispute through arbitration — it’s very possible that you’ve signed away the right to sue in court, participate in a class action lawsuit, or appeal the arbitration decision.

In contrast, voluntary arbitration is a choice rather than a necessity. The two parties agree to arbitration after the dispute arises, after they’ve had a chance to evaluate other options for resolving the dispute.

Binding vs. Non-Binding Arbitration

An arbitrator’s decision may be binding or non-binding. In binding arbitration, the arbitrator’s decision is final. That means a court can’t review or overturn the arbitrator’s decision except in very limited circumstances, for example, when fraud or misuse of power were involved or when the arbitration clause was unconscionable.

Non-binding arbitration allows either party to reject the arbitration award and go to trial. Of course, this isn’t ideal because you’ll have wasted considerable time and money on arbitration, but it’s at least an option.

After brushing up on the pros and cons of arbitration, consider having a Chicago personal injury lawyer review your arbitration clause and evaluate how (if at all) it will affect your personal injury case.

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How Does an Arbitration Clause Affect My Case?