Arbitration Agreements: What To Include / What To Find Elsewhere

Arbitration agreements should be in writing. Arbitration agreements for disputes to be administered by New Jersey Arbitrations Inc. must be in writing. The bare minimum that those agreements will specify is that disputes arising out of the contract will be resolved by arbitration administered by New Jersey Arbitrations Inc.

New Jersey Arbitrations Inc. recommends that arbitration agreements in written contracts be conspicuous, and that their wording be simple and clear. Following those recommendations helps avoid threshold arguments over whether disputes arising under the contract are arbitrable.

New Jersey courts have shown a willingness to enforce arbitration agreements even when these recommendations are not followed. An unpublished court opinion entitled Racioppi v. Airbnb, decided in the Superior Court of New Jersey on July 17, 2023, demonstrates that willingness. Of course, avoiding this threshold issue in the first place is the better practice.

In order to avoid disputes over the actual arbitration process, the arbitration agreement, directly or by reference, can fill in numerous gaps and address elements of possible contention. These elements include:

The name of the arbitrator, or the name of the organization that will manage the arbitration
Prerequisites to initiation of arbitration
How arbitration proceedings are initiated
Number of arbitrators
The qualifications of the arbitrator or arbitrators
How the arbitrator or arbitrators are to be selected
Whether proofs will be presented by live witnesses, as opposed to being limited to submission of documents
How the place of the arbitration hearings is to be determined
Whether arbitration hearings will be in person or remote
How the arbitrator or arbitrators will be compensated
What law is to be applied--State or federal. And if State, which State

The agreement need not, and typically does not, spell out all of these provisions. Instead, the agreement specifies a separate document that contains these details. This separate document can contain the “rules” under which the asrbitration is to be conducted. Thus the arbitration agreement itself may look something like this:

Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration. This arbitration will be administered by New Jersey Arbitrations Inc., in accordance with the Arbitration Rules of that organization. Judgment on the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof. If a party bypasses this agreement by initiating suit in court, or unsuccessfully challenges the arbitrator's award, the other party shall be entitled to recover costs of suit. Those costs shall include a reasonable attorney's fee for having to compel arbitration or defend or enforce the award.