Although I am skeptical about their claims, I believe they deserve a fair review. I personally tried the demo version – so you don’t have to and here is my take on it.

Can document crunch really help you avoid disputes? Can it really help you understand and find out the critical issues in your agreement? Is Document Cruch legit? Document Crunch is found to be more suitable for small projects and non-lengthy contracts. Overall, the layout and interface are simple and does deliver, but the platform fails by overreaching the goals stated and lack of consideration to the uniqueness of each project.

Let’s find out more!

Will you be at it, you may want to explore other interesting articles on disputes and arbitration in e-bay, AirBnB, writing construction disputes, and JAMS ADR.

What is the purpose of Document Crunch?

According to Document Crunch, they have developed an AI platform that can help you identify risks in your contracts and can present to you these risky clauses simply without the contract jargon.

They target the following type of contracts:

• Construction.
• Commercial realsestate.
• General commercial documents.
• Corporate governance and compliance.

Going through the website and some other online reviews (Disclaimer: Do not know if these reviews are through some kind of affiliation or not – but it is assumed they are not), it is clear the Document Cruch is NOT the following:

• Legal advice.
• A replacement to contract managers.
• Targeted for everybody.

The main purpose of Document Crunch is to provide quick information for Contractors (mainly) who are on “the ground” and do not have the time or cost luxury to go through the contract clauses one by one prior to signing the contract.

This information will mainly consist of a direct explanation of contentious construction issues such as variation/change order clauses, the extension of time stipulations, and delay penalties or damages.

It is important to note that there is no human intervention or support in the process. As for pricing, 1 “Crunch” is a 300-page review or less is $300 noting that as the number of crunches increases the cost decreases,

Uploading a Sample Contract to try Document Crunch demo version

Well, I decided to give it a direct shot and uploaded a sample “Subcontract Agreement” for MEP works for a building project consisting of 5 levels with 2 basements and a roof. The main reason I chose this contract is that it fits the main targeted criteria.

Main Contractors will usually be enforcing their bespoke or modified on subcontractors and pressure them into signing. In addition, subcontractors will be under pressure for signature and usually have less negotiating power.

That being said, I was also personally engaged by the MEP contractor to review the Contract agreement for advice as they had doubts against the main contractor and fear that they will be heading to a dispute.

The Contract agreement uploaded consisted of:

• Only the Contract agreement clauses (no drawings or specs were included).
• Total number of pages: 56
• File size: Approx. 12.5Mb

The overall registration process was fairly simple. I provided my e-mail address and received access credentials directly in my inbox along with a self-explanatory video on document crunch.

Below is a screenshot of the document uploaded and the platform interface:

Intial impressions on the Document Crunch

Without further ado, below is a screenshot of the demo version trial. A pdf of the contract agreement is also attached with the main clauses such as contract amount and dispute stipulations highlighted in color.

You can go through each item (up to the limit of the demo version) and check the rationale and sample language.

So far, my impression is that it basically draws the main risky clauses in a contract that affects the cost or time and explains them in a simple manner, which is fine. Although this is important, my main concern is that contract clauses should be construed together in order to fully understand the risk and obligations of either party.

See below example for dispute resolution mechanism clause:

The Rationale/ Insights provided:

In this section, it attempts to explain the importance of contract time and the implications that might arise if the contractor failed to achieve this duration. Although what’s stated is basically true, it is a bit generic. The person authorized to sign the contract agreement is already in the business and even if not an expert, would be aware of such basic knowledge.

The following Sample Language “SL” is provided

The Good: The explanation for work continuance and payment is acceptable and direct to the point.

The Bad: Does not address the issues if a portion of completed work/ invoice is disputed, delay in payments, and the stage of claims – dispute.

To be fair, not all scenarios can be fully placed, but it’s worth checking.

More Results and review of Document Crunch trial

Going more on to details, I liked the layout presented. The below extract shows the original clause along with the Rationale and Sample language.

Let’s take the example of clause 26 (Disputes) – Part1:

The Rational States the following:

• This Crunch Field identifies the formal dispute resolution mechanism mandated by the agreement to be used, (e.g., litigation, arbitration, etc.) including any mandatory mediation provisions. This will not include typical in-project dispute resolution mechanisms such as an Initial Decision Maker, referee or other process for resolving claims at the project level.
• The parties will want to consider whether disputes should be subject to mediation as a condition precedent to formal proceedings.
• Similarly, the parties will have to weigh their personal preferences and considerations as to whether they prefer litigation or arbitration to be the formal dispute mechanism. There are pros and cons to both mechanisms.

The Sample Language States the following:

• WORK CONTINUANCE AND PAYMENT. Constructor shall continue the Work and maintain the Schedule of the Work during any dispute mitigation or resolution procedure. If Constructor continues to perform, Owner shall continue to make payments in accordance with this Agreement.
• DIRECT DISCUSSIONS. If the Parties cannot reach resolution on a matter relating to or arising out of this Agreement, the Parties shall endeavor to reach resolution through good faith direct discussions between the Parties’ representatives………….etc

Unfortunately, it turns out that the whole Rational part and Sample language are the same/ repeated for the sections. The software basically “gave its understanding” of the whole thing and is repeated next to each sub-clause.

I DO NOT LIKE THAT

Also, for a first-time user, it is not clear how this information can be leveraged. Some clauses might be imposed by the client on all contractors and subcontractors and are non-negotiable. A good example will be cooperation clauses, insurance clauses, and those related to health and safety.

In addition, the AI did not correctly interpret the full clause. In the contract agreement, going to court is only possible in one special condition with special prerequisites that is contingent on many other factors..

Pros and Cons of Document Crunch

The Pros of document crunch

The platform is user-friendly and attempts to cover the usual construction risks. The main advantages perceived of Document Crunch are:

1. Easy and to understand.
2. Acceptable upload and “crunch speed”.
3. Attempts to make standard terms for the risky clauses.
4. For a short contract, can give you a qucik feel or gauge on the risks associated.

The Cons and limitations of document crunch

The main disadvantages, keeping in mind that only a trial version was tested (could be better or worse), are:

1. Limitations to to the different types of contract and how the clauses are actually interpretted. Example Design-build contract, EPC contracts, PPP contracts..etc each have the the clauses construed in a certain way with a legal reason behind it. Document Crunch cannot directly capture that risk.
2. Makes use of standard terms that might not be applicable or the norm at your part of the world or legal jurisdiction.
3. Output is repeated – So actual value gained is hard to measure.
4. Actual time and effort will be still required to review the results, by some one with some contract knowledge, especially for big projects and lengthy contracts. Thus, overall cost for review will still be affected.
5. It is obvious that American legislature and norms are followed. This might not be practical in other locations.

The final verdict on Document Crunch

Document crunch might be suitable for small value projects and non-lengthy contracts.

For more complex projects and contracts, I wouldn’t recommend Document Crunch, as human advice will offer better understanding and hence a greater return on investment in the long run.

The post Document Crunch AI Platform Review, Is it Legit? appeared first on ODR Guide.

Mediation is an informal, voluntary process where a third person, called a mediator, assists the parties to a dispute in reaching an amicable settlement. Arbitration, on the other hand, is a dispute resolution process in which the parties to a dispute agree to submit the dispute before a single arbitrator, or sometimes a panel of three arbitrators that renders a final decision in favor of one of the parties.

If we were to approach these methods of dispute resolution separately, we would reach the conclusion that an arbitrator’s role is essentially different from that of a mediator, and the arbitrator is not empowered to act as a mediator.

The function of an arbitrator is to examine the case put before him or her. A mediator, on the other hand, acts as a facilitator for the parties to help them reach their own agreement that satisfies, at least to some extent, their core preferences.

So, can an arbitrator meditate too? An arbitrator can mediate, noting that the role of an arbitrator is different than that of a mediator. To be more on-point, the combining of the two processes “Med-arb” is worth exploring.

What is Med-arb? , Med-arb is a hybrid mechanism, which combines the two processes of mediation and arbitration, with the arbitrator also serving as the mediator. In practical terms, parties to a dispute choose a third-party neutral who acts as a mediator and arbitrator.

How does Med-arb work? The parties will attempt to reach a voluntary agreement with the help of the third-party neutral through mediation. If the process is not successful or if the parties still have some unresolved issues in the dispute, the same neutral will act as an arbitrator and settle the remaining issues/dispute.

What are the costs of med-arb? The average expected cost of med-arb is $4,204, noting that it varies drastically depending on the case type, money disputed, complexity and location.

For a more detailed explanation on arbitration, mediation, and even conciliation please read What are the differences between arbitration and mediation? All you need to know about arbitration and mediation and What is Conciliation? What is the difference between conciliation and mediation? and for family disputes in Family Disputes Mediation: Resolving Inheritance, Business, Property Conflicts, and More.

You may also refer to our review on Document Crunch, the AI platform, for reviewing contracts with the intent of reducing risks and disputes.

Historical Background of Med-Arb

Med-Arb is not a new phenomenon. In the early 1940s, some arbitrators were advocating for its use. They argued that the role of arbitrators is to assist the parties in completing their bargaining and the most efficient way of doing so is to resort to mediation first.

But it was only two decades later when Med-Arb was formally resorted to as a dispute resolution mechanism. In 1969, Sam Kagel, a San Francisco lawyer, and arbitrator employed the technique to settle a nurse strike in the Bay area of San Francisco.

As a med-arbiter in the dispute, he persuaded the parties to give up their respective economic weapons — the right to strike and to lockout — in exchange for concessions in scheduling time and weekends off.

By the late 1960s and early 1970s, the mechanism spread to Canada, where the Quebec Department of Labour and the federal Department of Labour embodied it to settle ongoing disputes in the Quebec construction industry and in the creation of Via Rail.

The use of Med-Arb continued to increase during the 1980s, spreading worldwide in settling disputes in diverse fields such as nursing, journalism, public utilities, education, and commerce.

Nowadays, Med-Arb is most commonly used in labor law disputes, and also commercial law.

The Process of Med-Arb

Med-Arb is not necessarily regulated and its format depends on a case-to-case basis. In practice, the suggestion to use the Med-Arb process almost always arises at the initial meeting with the neutral.

However, mediation can also commence after arbitration has been initiated, and if it is unsuccessful, the parties return to the arbitration procedure.

The arbitrator may also choose the appropriate moment in the course of the proceedings to offer meditation services for settlement purposes.

Russell Thirgood explains that arbitrators conduct the mediation in one of the following ways: “the arbitrator consulting with both parties, arbitrators consulting with the parties individually, the parties consulting with each other without the arbitrators present or a combination of these techniques.

A common factor in determining whether Med-Arb is appropriate is the willingness of the parties to settle, and their desire to embody the mechanism within their process.

In addition, in order to create a productive and fair process, the neutral must possess essential skills. First of all, giving the hybrid nature of the proceedings, the neutral must have expertise and skills in both mediation and arbitration, as well as understand the requirements and standards for both roles.

In this sense, the neutral must be able to move from a facilitative role to an evaluative, decision-making one.

Second, the neutral, when acting as an arbitrator, must be able to disregard the information that was shared by the parties during the mediation.

Third, and finally, the neutral must be able to gain and keep the trust of the parties and establish and maintain credibility for the process.

Institutional Recognition of Med-Arb

Throughout time, Med-Arb has been recognized by various jurisdictions as an effective way of dispute settlement. The American Arbitration Association (AAA) recommends Med-Arb in certain circumstances.

At the same time, JAMS administers Med-Arb cases if it is within the contract or the parties have stipulated to it. In 2020, the ADR Institute of Canada adopted the Med-Arb Rules and announced a new Chartered Mediator-Arbitrator (C.Med-Arb) professional designation to enhance the use of med-arb in Canada.

In China, Med-Arb is embodied within the Arbitration Law of China, which came into effect in September 1995, as well as the respective Arbitration Rules of Chinese.

Article 51 of the Arbitration Law of China states that “a written conciliation statement [resulting from mediation] and an arbitration award shall have equal legal effect.”

The provision further enables arbitrators to decide when and how to conduct conciliation (“mediation”) during the arbitration.

Article 39 of the Arbitration Rules of the Beijing Arbitration Commission (“BAC”) adopts a similar approach but clarifies that mediation may be conducted at the arbitral tribunal’s discretion, as long as the tribunal obtains consent from both parties:

Advantages and Disadvantages of Mid-Arb

Advantages of Mid-Arb

The advantages of Mid-Arb can be summarized as:

1. Offers mediation flexibility and arbitration finality.
2. Provides an urgecny and to resolve the diputes, expecially in complex cases as all parties prefer to avoid arbitration procedures.
3. Provides cost saving in comparison to litigation and arbitraiton.
4. Helps preserve the relations between the parties by promoting amicable settelement.

Proponents of Med-Arb claim the mechanism joins mediation’s flexibility with arbitration’s finality.

With med-arb, parties can receive the advantages of both an enforceable award and amicable settlement. Arguing that the benefits outweigh the negatives,’ proponents believe self-determination is embodied within the initial consent agreement.’

The studies related to the process support the notion that Med-Arb reduces costs and increases the efficiency of the dispute resolution process.

In addition, Med-Arb practitioners report that most disputes are resolved within the mediation stage, without the need to resort to arbitration.

However, Med-Arb is most likely to be successful in cases in which there are many complex interrelated issues and the arbitration hearing is expected to be lengthy.

Disadvantages of Mid-Arb

The disadvantages of Mid-Arb include:

1. Neutrality of the arbitrator might be affected during mediation hearings.
2. Mediation can be utilized as stalling technique to gather confidential information on the other party.
3. Confidential information might be inadvertently revealed.

A common critique of Med-Arb is that information shared during confidential mediation caucus sessions will impact the impartiality of the neutral and the arbitration award thereof.

Some arbitrators do not consider this to be a problem; others decline to serve as mediator-arbitrators for just this reason.

Mediation communications in private caucus sessions provide the opportunity for advocates to reveal unfavorable information about the other side, knowing these communications are private and confidential.

However, in Med-Arb, the parties are aware they may reach arbitration, and sharing such confidential information may work against them.

Going Forward

Med-Arb is not merely the merging of separate mediation and arbitration processes, but a unique process designed to meet the needs of parties to a dispute. In the words of Mr. Martin C. Weisman, Med-Arb is ‘The Best of Both Worlds’.

In Med-Arb, arbitrators can mediate, which requires a high level of practitioner competence to do successfully. Whether the advantages of Med-Arb outweigh the disadvantages depends on the case-to-case basis.

Also subjective is the question of how efficient ‘Med-Arb is?’However, it is without a doubt that this procedure does allow arbitrators to mediate.

The post Can arbitrators mediate? All you need to know about Mid-Arb, Arbitration and Mediation appeared first on ODR Guide.

In response to the costly and lengthy traditional court proceedings, alternative dispute resolution (ADR) methods have been developed in an attempt to settle disputes.

Traditionally, the different kinds of processes that make up ADR include arbitration, mediation, negotiation, conciliation, and ombudsman.

Amongst these processes, arbitration has emerged during time as the most developed, advanced, and structured method of resolving disputes involving states, individuals, and corporations.

In recent years, more and more parties have resorted to arbitration instead of the traditional court proceedings given its faster, cheaper, and less complex nature compared to litigation.

However, as time passed by and arbitration became more and more expensive, parties have resorted to other methods of ADR, and particularly, mediation.

Nowadays, it is common practice to include in dispute resolution provisions a requirement that, before a dispute is referred to arbitration, it must first be referred to some sort of structured mediation between the parties (generally under a multi-tiered dispute resolution clause).

Although both are part of the umbrella term of ADR, these two processes present key significant differences, which this post aims to examine.

So, what are the differences between arbitration and mediation? The main differences between arbitration and mediation are summarized below

Many factors influence the expected time and overall cost for resolving dispute arbitration or mediation. Factors affecting the arbitration or mediation cost include:

• Type of dispute.
• Complexity of dispute.
• Value of the dispute.
• Involvment of other stakeholders
• Willingness of the parties for concluding the dispute.
• Relation and future prospects between the parties.

So, how long does arbitration take? The expected time for a domestic dispute arbitration award is 7 months to 7.3 months.

As for Internation arbitration, The expected time for international arbitration is 12 months while ranging from 9 months to 16 months or more.

Based on data gathered from the LCIA “London Court of International Arbitration” Arbitration TIme in comparison to the case value is tabulated below:

One would ask, so how long does mediation take? On average mediation take 30 days to be settled. Depending on the complexity and type of dispute it could range from several hours to a couple of months.

And, how much does mediation cost? A mediator charges between $300-$500 per hour, but this rate can go upper depending on the complexity of the case and the mediator.

You might be also interested to read about the Arbitration and Mediation hybrid “Mid-Arb” in Can arbitrators mediate? All you need to know about Mid-Arb, Arbitration and Mediation

In particular, this post explains the nature of these proceedings, their different stages, the role of an arbitrator compared to that of a mediator, as well as the outcome of the proceedings.

However, before dwelling on the substantive part, this post will explain, in general terms, the general characteristics of this arbitration and mediation.

To learn more about arbitration and mediation, you may refer to our posts on Arbitrability, Binding arbitration, and mediation.

ARBITRATION

Arbitration is a private and confidential process, where the parties to a dispute agree to submit the dispute before a single arbitrator, or sometimes a panel of three arbitrators (commonly known as the Arbitral Tribunal).

During the arbitration, the arbitrator or arbitrators hear the evidence and arguments presented by the parties, take them into consideration, and render a decision (known as the arbitral award).

In general, arbitration commences as a result of a contract between the parties, the so-called arbitration agreement in which the parties indicate the procedure to be followed during the proceedings.

Hint: Our worldwide map for arbitration costs can assist you in estimating your arbitration fees.

MEDIATION

The term mediation is used to describe an informal process where parties in a dispute request a third person or persons to assist them in their attempt to reach an amicable settlement.

This third person is referred to as a mediator and he/she has received training in the field. Mediation is most common voluntarily or entered into as part of a multi-tiered dispute resolution clause, but it may be, in certain cases, court-ordered.

Mediation can be initiated at any time before arbitration commences and even during an arbitration case before it concludes.

DIFFERENCES

Format of the proceedings

The essential difference between arbitration and mediation lies in their format.

Arbitration is a structured and formal process. Even though not a judicial process in nature, arbitration is still governed by a set of laws, which apply at different stages of the proceedings. First and foremost, the law governing the recognition and enforcement of the arbitration agreement.

Second, the lex arbitri, the law that governs the actual arbitration proceedings themselves.

This, and generally, the most important, there is the law or set of rules that the arbitrator must apply to the substantive matters in the dispute.

And finally, there is the law that governs the international recognition and enforcement of the award rendered by the Arbitral Tribunal.

Therefore, arbitration works efficiently because it is governed by a complex public system of national laws and international treaties.

On the other hand, mediation is a more flexible process, where the mediator assists the parties to the dispute to identify and consider options for the amicable settlement of the matter at hand.

Essentially, in mediation, the parties to the dispute are prompted to have an open discussion and narrow their differences in order to reach a common solution.

Mediation is not subject to any comprehensive system of national or international law. In a mediation, the parties seek to solve their settlement through an amicable dispute.

With the exception of the legal proceedings related to the enforcement of a mediation agreement and public policy concerns, this process is subject to practically no legal procedure and few legal limitations.

Stages of the proceedings

Arbitration is similar to a courtroom trial in the sense that it may include: a hearing; a pre-trial process, involving pleadings, discovery, and the preparation of written witness statements; cross-examination of witnesses; and the rendering of the award.

For this reason, arbitration proceedings, particularly in international commercial and investment disputes can take years.

The American Arbitration Association describes arbitration as being composed of five main steps:

• Preliminary hearing, where the parties meet to discuss substantive case issues, as well as exchange information and the witness lists
• Information exchange and preparation: parties share information and arbitrators handle any related challenges.
• Hearings: during this stage, parties present evidence and testimonies before the arbitrator.
• Post hearing submissions: this stage is not mandatory in nature, but it can occur when the parties need to submit additional information to the arbitrator.
• Award: the final stage of the arbitration proceedings, when the arbitrator renders a decision (award) and closes the case.

The mediation process, on the other hand, is less lengthy and complicated.

Depending on the complexity and importance of the dispute at hand, the duration of mediation can vary between several hours, days, or even months.

As a general rule, in most mediations, the parties reach a settlement within 30 days since the dispute has been brought to the attention of a mediator.

The mediation process is typically composed of two stages: the joint session and the caucasus, which may also occur simultaneously.

In the joint session, the mediator, a spokesperson for each party (typically a lawyer) and someone with the authority to enter into a binding settlement (it can be the spokesperson or another representative of the parties) have a meeting.

The joint session aims to provide information to the mediator on the dispute at hand, uncover any differing views on the facts, and clarify what each side considers a satisfactory resolution to be.

Sometimes, a joint session would also include other parties which are not necessarily part of the dispute, but they may be interested in the outcome of the process.⁴

After the joint session, the mediator would typically ask the parties to the dispute in a caucus. The caucus is a separate, confidential session with each party to the dispute, where the mediator collects information about each side’s interests.

Sometimes, mediators will continue discussions in joint sessions parallel to the caucasus, hoping that the open exchange of views will resolve the dispute faster.

Role of arbitration and mediator

The function of an arbitrator is essentially the same as that of a judge in a court of law, i.e. to examine the case put before him or her.

Therefore, an arbitrator examines the documents, evidence, and arguments presented by the parties applies the relevant laws and rules to the arbitration and renders the final award, which is binding upon the parties and legally enforceable.

In certain circumstances, the arbitrator may ask for further documents or explanations with regard to the documents being examined.

A mediator would typically ask questions to the parties in order to identify the issues in the dispute and support the parties in developing options to resolve the dispute.

Unlike an arbitrator, the mediator does not decide over the dispute nor does he/she have the power to impose any binding settlement upon the parties.

The mediator is there to facilitate conversations, suggestions, proposals, and counter proposals between the parties.

In addition to their formal role during the proceedings, mediators and arbitrators are also differentiated by the legal skills required to perform their role.

Resolving legal-type disputes is at the heart of arbitration.

An arbitrator needs to draw on his or her knowledge of relevant laws and policies in order to weigh up each party’s case and make a decision.

For this reason, arbitrators would usually have served as lawyers or judges and possess strong decision-making skills.

Mediators, on the other hand, are often people who have been trained in the social sciences such as psychology or sociology and are able to bring the parties to the dispute to a common ground.

The outcome of the proceedings

The final main difference between arbitration and mediation is related to the outcome of the proceedings.

Arbitration will always result in a resolution of the dispute that comes in the form of the arbitral award. On the other hand, mediation does not necessarily have to result in a settlement, even though research has found that more than 80% of the parties to mediation reach a common settlement.

The decision of the arbitrator or arbitrators is binding and legally enforceable upon the parties, whether they agree with it or not.

An arbitral award is very rarely subject to an appeal procedure, and in such circumstances, the issue would be related to the enforcement of the award rather than the proceedings themselves.

At the same time, the settlement in mediation might be enforceable only if the agreement contains an express clause stating so.

Arbitration Vs Mediation Costs

Since mediation and arbitration can be utilized in a variety of disputes, it is not practical to directly compare the overall average expected costs of each.

In theory, arbitration should be less extensive than litigation, given there are few possibilities to appeal an arbitration award.

However, in today’s reality, arbitration may take years and the costs involved are quite high.

There are two main types of costs related to arbitration proceedings:

• the administrative fees for the institution administering arbitration,
• Arbitrator compensation,
• Expenses paid to the arbitrator who decides over the case.

Additional costs may involve expert witnesses and lawyer’s fees.

Depending on the complexity and importance of the dispute at hand, the duration of mediation can vary between several hours, days, or even months.

As a general rule, in most mediations, the parties reach a settlement within 30 days since the dispute has been brought to the attention of a mediator.

As a relatively short process, mediation brings along fewer expenses. On average, a mediator charges between $300-$500 per hour, but this rate can go upper depending on the complexity of the case and the mediator. You can also refer to our article on family disputes mediations for the causes and expected expenses.

In addition, if the dispute is submitted to an official mediation institution (similar to arbitration), this could involve some additional administrative costs.

The post What are the differences between arbitration and mediation? All you need to know about arbitration and mediation appeared first on ODR Guide.

Unfortunately, you may find yourself in the position where you are treated unfairly by Upwork whether in conducting business together or had your user account closed or suspended by them. Account suspension by Upwork could result in the lockdown and loss of money in your account.

If you are confident that your Upwork account has been unfairly suspended by Upwork then you will have no other option but to open a complaint ticket prior to initiating a dispute.

How to open a complaint ticket on Upwork? A complaint ticket can be opened on the Upwork support center to appeal the suspension of your account noting that unless you have strong evidence, your chances of removing the suspension are low.

If you have a substantial amount of money on your account, and could not reopen your account by raising a complaint ticket, then you have no other option but to initiate a dispute. Similarly, if you are in business with Upwork, you will have to initiate a dispute.

So, how to open a dispute against Upwork? To start and open a dispute against Upwork, you have to send an official notice of dispute by e-mail to [email protected] from your registered E-mail address or by writing to their San Francisco address.

What are the estimated fees for arbitration against Upwork? For freelancers located in the USA, the fees of arbitration against Upwork are the lesser of $250 or the fees to be paid if the case is raised in court by the freelancer.

We have also reviewed the Jamsadr.com dispute resolution platform which is the platform used by Upwork and other companies such as Shein and Fiverrr, for resolving claims and disputes. You can read it at Your Quick Guide to JAMS ADR Platform: Mediation, Arbitration, and Dispute Resolution Services. You might encounter these platforms if you are taking a company into arbitration for issues related to the right to repair and company limitations.

Causes for a dispute between you and Upwork

The main reason for a dispute between you and Upwork will be the suspension of your account and the inability to withdraw funds. There are many reasons that may entitle Upwork to suspend your account. There are at least 16 main categories and 30 sub-categories that allow Upwork to suspend your account.

We have gone through Upwrok’s terms and conditions and community forms to summarize the main reasons and most common provisions used by Upwork to justify the suspension of your account.

1. Seeking and supporting activities or services that promot harmeful and lawful activities such as
   • Discriminatory, obscene, and activity that supports child exploitation.
   • Violation of intellectual property “IP”.
   • Assist in cheating or academic ghost writing.
   • Spread of “fake news” and misinformation.
2. Fraudulent or misleading uses or content
   • Manipulating the hours worked.
   • Misrepresenting your skills and experience.
   • Using a fake profile photo.
   • Allowing others to use your account.
3. All kinds of spamming
4. Requesting free services
5. Tampering with Upwork services source code.

There are many other indirect reasons that may cause Upwork to suspend your account. For example, your account can be dormant for a long period of time and when you sign in, Upwork’s “AI” or “security measures” marks your access as fraudulent behavior. This also applies for many other reasons, usually unintentional by you.

So, if you have money your account and received an account suspension that you believe is unfair (ie you did not commit a breach of the terms of service) then you are only left with two options:

How to open a dispute against Upwork

The chances to resolve the account suspension by customer services are low. The only chance your case fets resolved depends if the person reviewing your case is not just an “AI” and is competent enough and willing to go through details.

Otherwise, you will have to open a dispute against Upwork.

For other kinds of disputes, such as those against clients, you will have to settle them within the Upwork platform and as explained briefly below.

For other platforms, please see our article on Freelancer.com,

Dispute process and arbitration against Upwork

When customer service fails and a dispute arises between you and Upwork you will have to attempt to resolve the dispute amicably within 60 Days after issuing your notice.

If no agreement is reached then you will have to resort to arbitration or court.

Keep in mind that the rules and options differ a bit if you are located outside of the United States. Therefore, always note the following:

Governing law

Any claim and dispute will be governed by the laws of the State of Deleware, USA. However, any Claims and disputes by any Freelancer located in the United States will be governed by the state in which the Freelancer lives.

This means that for users out of the US, your claims will be governed by the laws of the state of Deleware. You do not have the option of arbitration via jamsadr.com.

This is a sneaky move by Upwork, more about it in the below sections.

Sending a Notice of Claim against Upwork

Before demanding arbitration of your claim (future dispute), you first have to notify Upwork of the existence of your claim. Similarly, Upwork has to send you a notification in case they have a Claim against you.

To send a notice of claim to Upwork, issue an E-mail to [email protected] via your account e-mail address. You can also send it by writing at “Attn: Legal, 655 Montgomery ST STE 490, DPT 17022, San Francisco, CA 94111-2676.

Make sure to use the word “Notice” in the subject of your e-mail or letter!

Binding Arbitration for USA Upwork users

This section is only applicable for users outside of the United States and its territories.

If you are unable to reach for an amicable solution within 60 days for the issuance (or receipt) of the notice of claim, then as per the terms and conditions, you have to go for binding arbitration before an arbitrator from JAMS instead of Court or Jury.

Since this is a binding arbitration clause, you need to learn more and understand binding arbitration. We have a clear explanation on this topic at What is Binding Arbitration? Is it better than Court?

What is the location of arbitration with Upwork?

The location of arbitration is in Santa Clara County, California in accordance with the JAMS Comprehensive Arbitration Rules.

If the Claim is related to employment or worker classification disputes, the arbitration will be conducted in the state and within 25 miles of where Freelancer is located in accordance with the JAMS Employment Arbitration Rules.

What are the arbitration fees?

The user will pay the lesser of $250 or JAMS arbitration fees based on what would have been paid if the case was raised in the user’s state.

Any difference shall be paid by Upwork.

Can I opt out of Upwork arbitration requirement in the USA?

You can opt-out of the Upwork requirement for binding arbitration by sending an official notification in WRITING within 30 days from the date of registration on Upwork.

You can also send your notice by e-mail to [email protected].

To correctly opt-out of the arbitration clause, your notice must include the following:

• Account username
• Your name
• Your address
• Your Telephone number
• Your e-mail address.
• A statememt stating that you wish to opt out of the Arbitration Provision.

Disputing Freelancers with Upwork Out of the USA

For freelancers out of the USA, you will have to follow the laws and regulations of the state of Delaware. Unfortunately, this severely hinders your ability to dispute against work and will be extremely costly.

Your best option is to try your best to strongly present your case while discussing it with Upwork after serving your notice of claim.

It will be extremely costly and time-consuming to sue them if you are out of the United States. Unless there is a substantial amount of money involved, you do not have other options but to accept the outcomes of your negotiations.

How to present my dispute to Upwork?

Like any claim, you have to present it in a proper and direct way. This should include, at least, the following:

1. Summary of your account information such as name, E-mail,..etc.
2. A brief description of the claim, this includes:
   • The causes, supported by evidence such as screenshots and e-mails.
   • The effects.
   • All relevant communication of the subject of claim. You have to provide all the evidence possible to justify your statements.
   • What excatly you are requesting and why.
3. Your contact information.

As stated earlier, whether you are in the US or outside, you have 60 days to settle the claim informally before proceeding into litigation or arbitration.

Chances for winning disputes against Upwork and is it worth it?

The chances of winning a dispute against Upwork in the US are much higher than if you are out of the US. This is because you have more control over the costs which are estimated to be $250 or less in contrary to those out of the US.

Choosing between legal action or arbitration against Upwork

If you are in the US, you have the option of opting out of arbitration into litigation. However, keep in mind that you have to issue a notice on this subject within 30 days of your registration.

Most probably, you did not think of such notice or even considered looking for it while registering. Unless you are a seasoned lawyer with experience in these issues, you will most likely have to go for arbitration

If you are out of the US, you do not have the option of arbitration.

Is the dispute with Upwork worth my time and money?

If you are located in the United States and have a good amount of money “locked” because of a dispute with Upwork, then it is worth the time and money.

You may attempt to resolve it informally within the 60 days period from your notice, however, if you sense the situation going south, do not hesitate to contact a lawyer or arbitrator on this subject.

If you are out of the United States, it is not worth it if the disputed amount is small. For large sums of money, work on your presence in the United States and contact a lawyer BEFORE issuing a notice so that the lawyer can guide you early on.

The post Upwork Resentment and disputes between you and Upwork. How to win a dispute against Upwork appeared first on ODR Guide.

In recent years a trend toward expansion of arbitration has been noticed. Arbitration is considered to be an attractive alternative to traditional court proceedings due to its features such as privacy, cost-saving, party autonomy, choice of arbitrator, and avoidance of adversarial proceedings.

It is considered a general principle that arbitration may be used to resolve almost any type of claim or dispute concerning legal rights. This has been referred to as a ‘presumption’ of arbitrability.

So, what is arbitrability? Arbitrability refers to disputes that can be settled by arbitration.

However, it is precisely because arbitration is a private proceeding with public consequences that some types of disputes are reserved exclusively for national courts. These proceedings are commonly related to public policy concerns.

The rationale for this is that certain matters are considered to be so important to the operation of justice or the running of the business that they are reserved exclusively to the control of the courts.

If a dispute is not arbitrable, the arbitral tribunal is limited in its jurisdiction and the claim must instead be submitted to domestic courts.

When discussing arbitrability, the most common questions that arise are:

What exactly is arbitrable and non-arbitrable? Who decides on arbitrability? Must the party raise the question of arbitrability or will the arbitrator raise it himself?

These are some of the questions that this blog post will seek to answer. But before dwelling on these substantive questions, you may read more about arbitration in Alternative dispute resolution (ADR) and it’s advantages and disadvantages and What is Binding Arbitration? Is it better than Court?.

I. The concept of Arbitrability

The concept of arbitrability is recognized in the provisions of the New York Convention and the UNCITRAL Model Law. Even though these instruments do not define arbitrability in precise terms nor do they refer to the term as such, they mention disputes capable of settlement by arbitration, which has been interpreted as referring to arbitrability.

In the general sense, arbitrability involves the question of whether a specific category of disputes can be barred from arbitration or whether it belongs exclusively to the domain of state courts.

Arbitrability is related to the law governing the recognition and enforcement of the arbitration agreement.

II. Limits on Arbitrability

Possible restrictions may arise in two different ways: subjective and objective arbitrability restrictions.

(a) Subjective Arbitrability

Subjective arbitrability refers to the personal legal capacity of the parties to enter into arbitration proceedings, including the power to conclude an arbitration agreement.

Certain entities, such as States or State bodies, due to policy considerations involved, may not be allowed to enter into arbitration agreements or may require special authorization to do so.

In the absence of a contractual capacity to enter into an arbitration agreement or be part of arbitration proceedings, the arbitration agreement is invalid, which makes the dispute overall non-arbitrable.

The question of the state’s capacity to enter an arbitration agreement is a matter of public policy”. To put it in opposite terms, subjective non-arbitrability concerns deficiencies in the contractual capacity of a party and it affects the overall validity of the arbitration agreement.

(b) Objective Arbitrability

Objective arbitrability, on the other hand, is related to the subject matter of the dispute.

For an arbitration agreement to be enforceable, the subject matter has to be arbitrable, i.e. it has to be a subject that the state considers appropriate to be arbitrated.

Some states allow any matter to be arbitrated which the parties may freely dispose of.

This is the solution in Belgium, Italy, the Netherlands, and Sweden.

However, since arbitration is a private proceeding with public consequences, some countries impose limitations and restrictions regarding the type of disputes that are suitable for arbitration proceedings.

These disputes are, by reason of their very character, non-arbitrable.

For example, in the United States, the 2017 Arbitration Fairness Act invalidates any pre-dispute resolution clause in relation to employment, consumer, antitrust, or civil rights disputes on the grounds that the weaker parties have little or no meaningful choice as to whether to select arbitration.

In general, non-arbitrable disputes are related to the criminal legal system of a country, such disputes related to bribery, fraud or corruption, but also to paramount national interests, such as natural resources.

Additionally, there is a set of economic-related disputes that some national arbitration practices recognize as non-arbitrable disputes, as follows:

• Patents and trademarks
  • Antitrust and competition laws
  • Insolvency
  • Corporate governance disputes

Each of these categories will be considered separately below:

(i) Patents and trademarks

Patents and trademarks are monopoly rights that only States can grant. For this reason, any dispute related to their grant or validity is outside the domain of arbitration.

However, the owner of a patent or trademark frequently issues licenses to one or more corporations or individuals in order to exploit the patent or trademark; these disputes between the licensor and the licensee may be referred to arbitration.

(ii) Antitrust and competition laws

In general, anti-trust and competition law-related issues are non-arbitrable when the arbitrator is asked to make a decision over which the public authorities have sole jurisdiction under applicable rules.

However, throughout time, the arbitral case law has consistently confirmed the arbitrability of disputes involving antitrust claims.⁷

(iii) Insolvency

Issues of arbitrability arise in respect of insolvency law as a result of the conflict between the private nature of arbitration and the public-policy-driven collective procedures provided for under insolvency laws.

In general, insolvency proceedings are usually in the exclusive jurisdiction of the national courts, and arbitration proceedings should be suspended once these proceedings are opened against one of the parties.

This is in line with the legislation of the European Union, but also with the national systems of English and Argentinian law.

In the U.S., national bankruptcy courts were traditionally reluctant to defer their jurisdiction to arbitrators.

However, this approach has changed over time and courts now look at the type of dispute before them and determine whether there are any core insolvency issues that may deprive an arbitral tribunal of jurisdiction.

(iv) Corporate Governance issues

In some jurisdictions, parties are free to submit corporate governance issues to arbitration.

But this is not the case everywhere. For example, Russian courts decide on the arbitrability of corporate disputes under Russian law.

III. The Law Governing the Issue of Arbitrability

The question of what law governs arbitrability is a complex one, and that the answer to it may depend upon the stage at which it is raised.

If the issue of arbitrability arises, it is necessary to have regard to the relevant laws of the different states that are, or maybe, concerned.

These are likely to include: the law governing the party involved, where the agreement is with a State or State entity; the law governing the arbitration agreement; the law of the seat of arbitration; and the law of the ultimate place of enforcement of the award.

Most commonly, the law of the seat of arbitration will be considered. That is because if the dispute is not arbitrable according to the law of the place of arbitration, the award will be open to setting aside procedures in that country and its enforcement may be excluded in another country.

However, there are exceptions. For example, under the 2017 Arbitration Fairness Act, the validity and enforceability of an agreement to arbitrate is determined by a court, under federal law, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically, or in conjunction with other terms of the contract containing such agreement.

The question of arbitrability may be raised at two different stages of the dispute resolution process: the commencement of the proceedings and the recognition enforcement stage, including any proceedings to set aside the award.

Although in the majority of the disputes the arbitrability of the case is raised by one of the parties, the predominant view is that arbitrators have the duty to analyze the arbitrability of disputes and deny jurisdiction if the matter is not arbitrable.

(a) Commencement of the proceedings

The first stage is at the commencement of the process.

A national court may be asked to stay curial proceedings, instituted in apparent contravention of an arbitration agreement.

A stay may be refused on the ground that, according to the relevant national legal system, the dispute is not susceptible to determination by arbitration.

Alternatively, at that point, a national court may be asked to affirm, by some appropriate declaration, or order, the enforceability of an arbitration clause.

Alternatively, the question may be asked before an arbitral tribunal, which needs to determine, based on the principle of Kompetenz-Kompetenz, whether it has jurisdiction over the dispute.

According to the principle of Kompetenz-Kompetenz, an arbitral tribunal is vested with the authority to decide upon its jurisdiction with respect to any given dispute.

In making such a decision, it will inevitably include an assessment as to whether the dispute at hand is arbitrable should such a question arise. In general, when faced with a question of arbitrability, most Tribunals will apply the law of the seat of arbitration.

ln the case Company M v. M SA”, the tribunal considered that if the issue of arbitrability arises at the pre-award stage, the applicable law is that of that governing the arbitration agreement.

(b) Enforcement and Recognition stage

The other point where the question may arise is at the enforcement stage.

Then, the question may arise in one, or more, countries where the award may be sought to be enforced, whether recognition should be refused on the ground that the subject matter of the dispute was not capable of settlement by arbitration under the law of that country.

Article II and V of the New York Convention lay down a uniform rule addressing issues of arbitrability that may arise at the stage of recognition and enforcement of the award.

Under these provisions, issues of arbitrability must be dealt with under the lex loci.

In other words, the party resisting recognition and enforcement of the arbitral award must demonstrate that the subject matter of the dispute is not arbitrable in the place where recognition and enforcement are sought.

UNCITRAL Model Law, in Article 36, mirrors this approach and provides for issues of arbitrability to be determined by the laws of the state where recognition is sought.

In conclusion

Arbitrable disputes are those that can be settled by arbitration and will be ratified by courts if necessary. Non-arbitrable disputes can be only resolved by national courts due to law requirements, public order, and national interest.

Hint: Our worldwide map for arbitration costs can assist you in estimating your arbitration fees.

The post Arbitrability Concept, Restrictions, and the Applicable Law appeared first on ODR Guide.

Cancellation of sports events such as marathons and triathlons is very upsetting to participants as they have been planning and practicing for the event and also, risk the loss of registration fees and other related costs.

The big question on everyone’s mind is, what happens when a marathon or triathlon such as IRONMAN is canceled.

Can I get back my race event registration fees? The chances of recovering all the race registration fees are low. The best option is accepting a postponed entry in an upcoming event. If you do not have that option, minimize losses by accepting the partial refund offered by the race event organizer.

The next thing that will pop into your mind is most likely, that is unfair, what can I do with corporate organizers such as World Triathlon Corporation (Organizer of the IRONMAN triathlon) who canceled my race?.

Can I sue the race organizer? Individually suing the race organizer for canceling the race is not worth your money or time. However, Joining a class action lawsuit is your best and most economic option.

How can I avoid losing money due to race cancellation by organizers in the future? To avoid the risks of race cancellation, buy race cancelation insurance which costs on average $50 – $165, depending on the race fees and category. You will have to claim it separately, but you would recover most of your costs.

Depending on your insurance plan, you will most probably end up with:

1. Full refund, might be subject to some admin charges.
2. Redund of entry fee, less 15% excess. Example; nirvanaeurope insruance terms and conditions.
3. Receive a 75% credit (% depends on plan) to future races of your choosing. Example, Platinum Racing refund insurance option for purchase to cover events cancelled due to Covid-19.

Please keep in mind that most insurers require the event to be at least 15 days from the date of purchase.

For local events with the majority of local participants, you may opt for legal action in small claims court as the governing rules are the local rules which most participants are aware of and share the same risks.

You can read more about the small claims courts processes if you have a similar issue but with local organizers and smaller fees in Small Claims Court in the USA: Facts You Need To Know Before Filing.

You might also consider checking other informative posts for disputes with big corporations such as Upwork at Upwork Resentment and disputes between you and Upwork. How to win a dispute against Upwork.

Sports events basic terms and conditions

If you register for any events such as the IRONMAN race you will have unique terms and conditions that you will have to agree to in order to successfully register for the race. These terms and conditions might vary slightly across different regions, but will most likely consist of the following waivers in favor of the race organizer:

• The race orgainizer has the right to delay, cancel or modify the event – At their will.
• The race orgainizer has the right to delay, cancel or modify the event due to safety concerns.
• The race orgainizer has the right to delay, cancel or modify the event due to acts of god or public disasters.

Is suing the marathon or triathalon race organizer an option?

Suing the race organization, such as World Triathlon Corporation, by yourself is not an option. It is expensive and time-consuming to individually sue a race organizer corporation by yourself.

The costs and fees outweigh the benefits, and most lawyers will not accept the case as its value is probably less than the cost threshold they can accept.

However, you can join in class action lawsuits. More about class action lawsuits below.

My race is cancelled ? what shall i do next?

Depending on your situation, the following scenarios apply:

The marathon or triathalon event is potponed

It is not recommended to initiate a dispute or legal action in this case. While accepting the postponement of your entry, express your concerns and voice all your complaints in writing.

You might be able to extract some more concessions out of the organizers. Usually, first responders are able to extract more from the organizers than those who settle later.

If you can not accept the proposed date, request changing your entry to any similar race. Unfortunately, the terms and conditions of the race give the organizers the right of postponing the race as stated above.

Therefore, your best option is to negotiate any kind of race entry to avoid losing all your money.

I do not have a race cancellation insurance and my race got cancelled

Request and initiate complaints against the race organizers to obtain whatever concessions possible. You will get the most if you voice your complaint as early as possible.

The more the settlement process takes time, the fewer chances you can recover any losses amicably.

I have cancellation insurance, How can I claim my money back?

You will have to contact your insurance agency and fill the necessary forms along with evidence of cancellation, such as E-mails to obtain a payout.

Depending on your insurance plan, you will most probably end up with:

1. Full refund, might be subject to some admin charges.
2. Redund of entry fee, less 15% excess. Example; nirvanaeurope insruance terms and conditions.
3. Receive a 75% credit (% depends on plan) to future races of your choosing. Example, Platinum Racing refund insurance option for purchase to cover events cancelled due to Covid-19.

Class action lawsuit against marathon and race organizers (like IRONMAN)

What is a Class Action lawsuit?

A class action lawsuit is a legal procedure that allows one or more plaintiffs to file a “combined” lawsuit on behalf of a large group of people.

By doing that, the economic barrier and cost preventing a single member of the group who was affected by the actions of the defendant are removed.

In the case of marathon and triathlon race cancellations by the organizer, many of those affected can join in a class-action lawsuit to recover some of the losses they suffered, or at least, force the organization to change the future race policies.

Is the Class action lawsuit worth my time?

Joining a class action lawsuit is worth one’s time as you will not be doing any legal work or follow up by yourself.

You will register your name and information which be subsequently added to the list along with the others making part of the lawsuit.

If the class action lawsuit is won, you will receive the money, less the attorney fees, divided upon all the participants in the list, bearing in mind that lead plaintiffs receive the most money.

How much money will I get from the Class action law suit?

On average, a handful of dollars. Do not expect to recover all your losses or huge sums of money if you win the class action lawsuit against the marathon or triathlon race organizers.

However, you will be able to punish the companies (in case you win the case) and pursue them to change their course.

In the case of the IRONMAN class action lawsuit, it seems that the case is lost in terms of money, but, it has been made very clear to the IRONMAN cooperation that they will have to change their behavior in the future in order to retain participants.

How much will a class action law suit cost me?

In usual situations, the class action lawsuit will not cost you anything. The lawyer firm initiating and filing the class action lawsuit will be paid by getting a bulk share of the money received in case a settlement is reached.

A class-action lawsuit will usually cost you nothing. The lawyer who is filing the class action lawsuit will get his share of the final settlement. They just put your name on the list amongst others and the money is divided up accordingly.

In cases where the event is limited and on a local level, a lawsuit can be initiated in the small courts. More about the Courts systems in USA’s Virtual Courts: Here’s What You Need to Know and in case you are in the European Union and think you have a dispute with an organization, consider raising it as explained in the EU ODR Platform: The Ultimate Guide for Successful Dispute Resolutions.

The silver linning

Due to the strict terms and conditions, it is hard to win a lawsuit against marathon organizers and Triathalon cooperations such as IRONMAN. On a personal level, your best option is to negotiate to postpone your race entry or accepting a partial refund.

Also, in times of uncertainty on travel rules and restrictions, opt for race cancelation insurance. It might cost you up to $50 – $150 more, but you will be able to recover a big portion of your fees.

Please keep in mind that other costs such as plane tickets or hotels might not be covered, therefore, make sure to include them in the insurance policy.

If you can, try adding as much contingency as possible, such as booking in free cancellation hotels or arranging other kinds of insurance.

On a “Class” level, a class action lawsuit will most likely be lost due to the strict terms and conditions but will definitely make an impact on the race organizers.

The post Triathlons and marathons race cancellations, refunds options, and disputes. How to get your money back appeared first on ODR Guide.

The secret to writing a proper construction notice of dispute lies within the details.

Disputes are a part of the construction business. In the unfortunate case, a construction claim is not resolved and escalates into a dispute, this is the article for you.

How to initiate a construction dispute? Usually, an official notice of dispute is issued by the authorized person to the official address of the other party. The stipulations of the contract must be strictly followed to avoid wasting time and resources and to avoid legal nuisance.

You may also refer to our review on Document Crunch, the AI platform, for reviewing contracts with the intent of reducing risks and disputes.

To learn more about arbitration and alternative dispute resolution, please read on Alternative dispute resolution (ADR) and it’s advantages and disadvantages and What is Binding Arbitration? Is it better than Court?

Each project is unique

Each project contract and particulars are unique, therefore, before initiating a dispute, the contract clauses must be reviewed vigorously and strictly followed. For the sake of this article, it will be assumed that the project contract is a typical EPC contract for projects designed by the employer and executed by the contractor.

Also, it will be assumed that the parties are unable to resolve their claims amicably and a dispute is inevitable.

Thus, the FIDIC Redbook will be the point of reference for this article. Please leave a comment or drop us an e-mail if you have a specific question or request on disputes arising out of other forms of contract such as the FIDIC Full spectrum of conditions of contract (Yellow, White, silver,,etc), NEC, and bespoke contracts.

We emphasize the fact that each project is unique and one should be careful when handling a dispute process.

Below is a link for free notice of dispute in editable word format. Do not worry, we do not spam.

As an experienced Claims and disputes consultant, I strongly recommend using proper contractual correspondence and understanding how to present your case. One of the best guides (Amazon Link) on claims effective writing and response, provides excellent support, even if you are not experienced in the topic.

Writing the construction notice of dispute

The first rule of arbitration is not to go into arbitration! Only if all amicable resolution attempts have failed, then escalating the claim/ conflict into a dispute becomes feasible.

A construction notice of dispute must consist of the following, as applicable:

1. Addressing the letter as per the contract.
2. Clear subject line.
3. All attachments (if any, must be numbered and referenced).
4. Letter body and contractual reference.
5. Moving forward.

Directing the notice of dispute

The notice of dispute must be addressed to the other party as per the official address and person specified in the contract.

Most contracts include the address of each party and notice requirements. These might include; sending them by fax or courier, stamping and returning..etc.

From personal experience, many companies fall into the trap of sending the notice of the dispute to the person whom they have been dealing with the most instead of that specified in the contract.

Letterhead and subject

The following basic items must be included (see the free example provided in the link above):

• Date
• Total number of pages
• The total number of attachments.
• Unique reference number.
• Address of the other party exactly as per the contract. Usually consists of the legal company name (no abbreviations!), registered telephone number, P.OBOX, and area location.

TIP

Disputes usually run for some time after the original people invloved in it leave the company or are relocated to other projects. To avoid date confusions, always, use month name format. Example: 13-Nov-2020 .

The full project name as per the signed contract must be added to the letterhead. In addition, the person to whom it’s directed must be added. Example: Attention: Eng. John Smith.

Afterward, the subject must clearly state that this letter serves as notice. Example:

Subject: Notice of Dispute – Contract Agreement Clause 20.1 (Disputes and Arbitration).

Letter body for the construction notice of dispute – Introduction

Start the letter with “Dear Sir” or “Dear Madam”. You may change this as you wish.

Start the letter by referencing the contract agreement along with the contract reference number and signature date. If you have no contract signed, refer to the official document binding the parties together such as a Letter of Award (LOA) or Service work order.

Afterward, refer to the claims officially submitted by you and several discussions or settlement attempts carried out by the parties.

Examples of items to be referenced in the introduction:

• Signed contract agreement.
• Signed LOA or Work Order (If no contract agreement exists)
• Previous letters, E-mails, or even discussions (if no other evidence exists) related to the subject of the dispute. The reference must include the unique reference number of each piece of evidence along with the date, in chronological order.
• Previous meetings regarding the dispute.
• The attempts to previously resolve this dispute amicably.

Letter body for the construction notice of dispute – First Paragraph

Always assume that the person reading the letter is new to the subject and has no idea what’s going on. This will give you the upper hand later on as all your documents will be clearly structured with consistency in the details.

Presenting the case clearly is a big part of the job.

In this section, you will briefly reiterate the contents of the above-referenced items. The purpose of this paragraph is to show how the dispute started, the several letters exchanged on the subject, and what was their purpose.

Letter body for the construction notice of dispute – Second Paragraph

In this paragraph, you should clearly state your demands. Make sure to refer to the letters or e-mails previously issued on this subject. For example:

The party (Which is you), requests the other party (name/ description of the other party) to reimburse the first party as follows:

1. Release of withheld retention money, totaling $1,000,000.
2. Cost compensation as per the below table:

Letter body for the construction notice of dispute – Third Paragraph

In this section, you will briefly sum up the items described above and reiterate your request for the other party to comply with their contractual obligations. Afterward, refer to the contractual grounds to which the dispute is raised in full.

Example (It is a bit tedious but necessary):

Clause 21.6 [Arbitration]

Unless settled amicably, and subject to Sub-Clause 3.7.5 [Dissatisfaction with Engineer’s determination], Sub-Clause 21.4.4 [Dissatisfaction with DAAB’s decision], Sub-Clause 21.7 [Failure to Comply with DAAB’s Decision] and Sub-Clause 21.8 [No DAAB In Place], any Dispute in respect of which the DAAB’s decision (if any) has not become final and binding shall be finally settled by international arbitration. Unless otherwise agreed by both Parties:

(a) the Dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce;
(b) the Dispute shall be settled by one or three arbitrators appointed in accordance with these Rules; and (c) the arbitration shall be conducted in the ruling language defined in Sub-Clause 1.4 [Law and Language].

The arbitrator(s) shall have full power to open up, review and revise any certificate, determination (other than a final and binding determination), instruction, opinion or valuation of the Engineer, and any decision of the
DAAB (other than a final and binding decision) relevant to the Dispute.
Nothing shall disqualify the Engineer from being called as a witness and giving evidence before the arbitrator(s) on any matter whatsoever relevant to the Dispute.
In any award dealing with costs of the arbitration, the arbitrator(s) may take account of the extent (if any) to which a Party failed to cooperate with the other Party in constituting a DAAB under Sub-Clause 21.1 [Constitution of the DAAB] and/or Sub-Clause 21.2 [Failure to Appoint DAAB Member(s)].
Neither Party shall be limited in the proceedings before the arbitrator(s) to the evidence or arguments previously put before the DAAB to obtain its decision, or to the reasons for dissatisfaction given in the Party’s NOD under
Sub-Clause 21.4 [Obtaining DAAB’s Decision]. Any decision of the DAAB
shall be admissible in evidence in the arbitration.
Arbitration may be commenced before or after completion of the Works. The obligations of the Parties, the Engineer and the DAAB shall not be altered by reason of any arbitration being conducted during the progress of the Works.
If an award requires a payment of an amount by one Party to the other Party, this amount shall be immediately due and payable without any further certification or Notice.

Letter body for the construction notice of dispute – The Conclusion

The conclusion consists of TWO parts.

In the first part, state that you intend to carry on with the dispute as per the stipulation referred above if it remains unsolved. This is by stating the body to which the dispute will be referred in accordance with the contract such as DIFC or The American Arbitration Association.

In the second part, give the other party one more chance to settle the dispute.

This is by stating that you are willing, in the interim period, to meet up with the other party to discuss the release or payment of the money claimed by you. It is important to make it clear that you are proceeding with the dispute but will be willing to listen to the other party as you proceed.

Done with the letter, now what?

Contact the experts and make sure all your documentation is in place and readily available in soft and hard copy format. We always advise taking an expert opinion on the merits of your case before issuing a notice of dispute.

All the best!

The post Writing a Construction Notice of Dispute. Free Sample Letter appeared first on ODR Guide.

Online dispute resolution is an alternative. A change. Like rules and courts started as an alternative to sword fighting, ODR is a new alternative. Change cannot be avoided, therefore we should be focusing on addressing all the pros and cons of ODR and from all points of view as we will all inevitably use ODR (most probably, you already did without knowing! )

My thoughts are below. Happy reading!

To read more about ODR especially from the literature point of view check out; What is ODR (Online Dispute Resolution)? What does ODR mean? and Online Dispute Resolution: The Advantages and Disadvantages.

Common issues with ODR

When discussing ODR, a wide variety of advantages are presented such as:

1. Overcoming travel and location restrictions.
2. Anticipated decrease in costs. Mainly due to less travel, remote working and ability to share documents online
3. Reduced dispute resolution time. This is due to reduction in lost time from travelling, coordination and agreeing on face to face meeting, and in exchanging hard copy documents.
4. Justice delayed is justice denied! The ability to speed up “justice” indirectly affects economies and businesses in a positive manner as it improves investor confidence.

However, many issues that arise in practice are not discussed nor is it presented in a concise manner. This might be due to the lack of a centralized or “approved” platform for ODR, which can provide consistent feedback. Before going into the drawbacks of ODR, below are a few reasons which might explain why there is not enough information on the disadvantages of ODR:

1. First of all, like the advantages of ODR, there is no enough empirical studies to elaborate on both; the Pros and Cons of ODR and over a long period of time.
2. Not all countries have a similar stance on ODR. Therefore, it is hard to obtain verified data especially when issues of enforcement of ODR awards is still not clear.
3. While the UNCITRAL “UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW” did issue technical comments in 2017 on ODR, global consensus on ODR is still not achieved.
4. On another note, one might consider that one ODR drawbacks stems from its online advantages! Since ODR can be conducted online, there is no border restrictions. Therefore, people in china can be associated in a dispute with people from Sweden via a Canadian or American ODR platform. As you, can see many doubts can arise from the respective disputants due to the variety in language and culture between them.
5. Can Zoom meetings be considered as ODR? We need a dedicated platform for ODR – Not coordinated zoom meetings. This platform must be able to capture and externally record the meetings to ensure that the meeting was conducted on a fair manner and has some sort of judicial support.

For example, I recently attended an “Ad-Hoc ODR” Zoom meeting (as an observer) between 3 disputants and an external expert. One party spoke for nearly 2.5 hours without interruption and when the other party tried to explain his case, he started experiencing “mike” issues. Consequently, the expert ended the meeting without all parties having the same speaking chance due to “mike issues” and did not even mention this in his “Minutes of Meeting”

Practical drawbacks of ODR

1. Anything online is not private. Period. Cyberattacks are on the rise and no platform is safe from hacking attempts. In addition to that, there is concerns from the use of simple hack and tricks such as using an external screen recorder to record an ongoing session.
   • From work experience, I started noticing that some managers (not necessarily in a dispute) start two meetings at the same time through different platforms such as Zoom and WebEx, then, will use the recording function in one to record the original meeting without the knowledge of the participants.
2. Even with globalization, barriers still exists. Some of the disadvantages of ODR are not inherent from the process itself but from the differences between disputants themselves. A dispute might arise within business partners from France and India. In that case, even if English is used as the language of dispute, you cannot guarantee the full proficiency and ability of both sides in presenting their case correctly. To make things worse, one party might be at right but fail to correctly present their case! Such instances are bound to happen and will make people shy away from ODR in the future.
3. Conflict of interest. Individuals, Large corporations, hedge funds, venture capitalists..etc can be in invested in ODR companies through shell companies which might influence the decision of certain disputes. Many questions can come up, for example, they can influence the AI coding to be more biased towards certain entities such as Amazon or Facebook or even influence those assigned in complex cases.
4. Concerns on justice. This subject is discussed extensively in the literature mainly on the impacts of ODR in justice in terms of:
   • Procedural Justice (determining how fairly people are treated),
   • Distributive Justice (determining who gets what).,
5. These issues stem from the fact that not all people have the same level of access to the internet or “tech-savviness”. Not all countries have the same internet speed, access to the internet, and similar costs. A certain platform can be blocked in one country and so on. Many other issues such as body language and the ability to express oneself are also discussed extensively in the literature. For example, in many companies the person authorized to go into dipsute is usually (to some extent) older and less tech savy than those who are actually part of the dispute. This evident in Engineering or design firms, which are owned by one or more person but managed and operated by a different/ younger team.
6. Ability to actually negotiate and obtain reasonable concessions. Indirect communications usually results in one party being less well to give some concession or change their position in order to resolve a dispute. Disputants sitting at the comfort of their homes or office will most likely not be able to fully undertand or accept the other party point of view in many aspects.

Disputants tend to forge that ODR is not about enforcing rights, but about resolving and settling disputes reasonably.

Suggestions for improving ODR

Few additional suggestions to the usual ones discussed in the literature are suggested, such as:

• Implementing an eligibility clause for using ODR. This means that the contract in question and the disputants have the same capacity to go into ODR, represet themselves reasonably in ODR and have no bariers or issues with ODR.
• Use of bloch chain technology to increase the trust in the use of ODR and solving some of its security issues.
• A new convention specifically for ODR to internationally ratified.
• Focusing on fairness and quality of service and not on making it cheaper.

There are other suggestions that are a bit different but require more elaboration (Personal thought), namely; the use of a hybrid approach.

This is a Traditional ADR approach (Offline) infused with ODR. The ADR procedure can be initiated offline (the traditional way) and once the ADR process commences (for example, arbitration), a mix of “In-Person” and (Online) sessions and proceedings will be carried.

The use of a specific ODR platform for some aspects of the arbitration process can be preset into the arbitration agreement. The purpose is to reduce some of the arbitration costs and reap the benefits of both ADR and ODR.

Wrong approach towards ODR

It is human nature to go overboard and forget the original goal or intent of their actions. Overcomplicating processes and focusing on automation is one issue that plagues online customer service platforms.

The use of bots, automatic replies, and virtual assistants is not handy. Everybody knows that this is just a way to reduce human input, and hence costs. The use of AI and bots to gather or filter information by relying on certain keywords or behavior is not helpful especially for those who are not accustomed to using the internet (for things other than normal browsing or watching youtube videos). In addition, the interface and speed are usually not helpful which further acts as a barrier towards mass adoption.

This is evident in monetary disputes that are solved by AI. Where one party may on purpose go for high reductions in demands directly at the commencement of the settlement process to shift the algorithm to his favor as he/she is “trying to resolve the dispute”. This ignores the fact that the initial money claimed was probably much more than what is fair.

Other global risks for ODR

These are described as global risks as they affect the internet as a whole. Deep fakes might result in severe corruption and defrauding in online hearings and cases involving expert witnesses. It can be resolved by implementing additional security requirements such as secret verification codes, fingerprints, and double authentications by other parties too. The use of blockchain technology will play an important role in the security process too.

Other security issues include manipluation of data and hacking to gain leverage.

The last issue is political and is concerned with worries about enforcing the use of private ODR providers in international disputes which might cause political issues to arise.

Final Thoughts

ODR is here to stay. A new convention, similar to the new york convention, may be the first step for worldwide adoption and consensus on ODR awards and for seeking remedies to its drawbacks.

The post Personal thoughts on Online Dispute Resolution and its future. appeared first on ODR Guide.

What is an Arbitration Agreement? An arbitration agreement is an agreement between the parties to refer a present or a future dispute arising out of a contract to arbitration.

Details about arbitration and ADR methods are extensively discussed in What are the Main Types of Alternative Dispute Resolution – ADR and What is Binding Arbitration? Is it better than Court?

Types of Arbitration Agreement

There can be 2 types of Arbitration Agreements:

1. Arbitration clause in normal contracts: This means that when in the normal contract or agreement for any business or a bank and customer agreement there is an arbitration clause which means that in case of any dispute in future between the parties to the agreement, they should refer it to arbitration.
2. Submission Agreement: This is the type when there is no agreement between the parties and after the dispute arises the parties decides that the dispute should be settled by arbitration.

Purpose of Arbitration Agreement

The purpose of an arbitration agreement is that the disputes should be settled without going to courts and in a timely manner.

Overall, the parties spend less, takes less time and the procedure is more simple in comparison to court litigations. However, It is not without disadvantages. Let us see the pros and cons of an Arbitration Agreement.

Pros of Arbitration Agreement

• Saves precious time of the parties.
• Usually more cost effective than court litigation.
• Flexible for the parties.
• Less complicated than litigaiton.
• Provides confiecntiality and privacy as the proceedings are not open to public.

 Cons of Arbitration Agreement

• Sometimes it becomes expensive than litigation when the dispute is complicated.
• Closes the door for all the other forms of dispute mechanisms.
• Parties often unknowingly sign and becomes bound by the arbitration clause.
• Generally, it is binding and hence the parties have no option but to accept the decision.

More about Arbitration Agreement here and Arbitration costs here.

What an Arbitration Agreement should contain?

The Arbitration Agreement has to be necessarily in writing whether as a clause in an agreement for arbitration or as a separate agreement for settling a dispute via arbitration. The arbitration clause or agreement can never be oral.

A valid arbitration agreement should be in a form of a valid contract and fulfill all the requirements of a contract. It should specify the disputes which would be referred to as arbitration and the dispute should be related to the agreement to which the arbitration clause is the part.

It also specifies whether arbitration would be binding on the parties and how many arbitrators would be there (the number should be odd). The clause also mentions the governing law and jurisdiction.

A simple Arbitration Clause should at least specify the following:

1. Nature of dispute.
2. Number of Arbitrators.
3. Place of Arbitration.
4. Language of Arbitration.
5. Governing Law.

An Arbitration clause can also specify the method of appointment of arbitrator/s, qualification of the arbitrator/s, time taken for deciding the dispute, etc.

An example of a simple arbitration clause:

“Any dispute, controversy, or claim arising under, out of, or relating to this contract shall be referred to and finally determined by arbitration. The arbitral tribunal shall consist of a sole arbitrator, the place of arbitration shall be “name of the place”, the language to be used in the arbitration proceedings shall be “name of language” and the dispute shall be decided in accordance with the “jurisdiction”.

Process of Arbitration

1. The first step is sending a notice by the Claimant to the Opposite side. A notice for initiating arbitration proceedings is sent to the other party by the claimant generally. The notice should include the details of the dispute, the choice of the arbitrator/s if it is be decided mutually and if certain rules have to be followed then the mention of the said rules. The other party should reply to the notice within a certain time and mention of their choice or arbitrator and confirmation to start the arbitration.
2. After the appointment of arbitral tribunal, the nature of dispute is discussed with the tribunal by the parties and the timeline is set for deciding the dispute.
3. The claimant gives his/her claim in writing and this would be followed by a reply from the Defendant, giving of evidence by the parties, cross examination of the witnesses and experts and finally argument by the lawyers of the parties. The time taken for arbitration hearing depends on complexity of the issue and the claim involved.
4. After this the arbitral tribunal decides the matter and gives it verdict which is called the Arbitral Award. The award can or cannot be challenged depending on the nature of the arbitration. If it is a binding arbitration agreement the parties can only go to court and challenge the award on the ground of fraud or cheating by the tribunal.

A Contract with an Arbitration Clause

Any contract which we sign today has an arbitration clause. Before entering into any contract, one should look for the arbitration clause.

Many times people sign the contract without seeing all the clauses and only after signing do they discover that they are bound by the arbitration clauses. In any contract, one should find that how any dispute will be resolved in case it arises in the future.

The advantages and disadvantages of an Arbitration Clause

The benefits depend on the type of contract.

For example, an Employment Contract generally has an arbitration clause which is beneficial for the employers as the employees give away their rights to go to the court and it is found by surveys that the arbitrator generally decides in favor of the employer.

Advantages of an Arbitration Clause

• Fast – Arbitration reduces the time taken to decide a dispute between the parties as compared to litigation which can take indefinite time. The process of arbitration is also simple which also saves time.
• Appointment of Arbitrator/s – If a dispute requires an expert or a specialist from any field, an arbitrator with special knowledge or with experience can be appointed.
• Flexible – The process of arbitration is more flexible than litigation as the parties have more say in the process of arbitration. The parties have more control on the arbitration proceedings.
• Less Expensive – The process of arbitration can be less expensive as it is less complicated and less time taking. The parties can end up spending more in litigation as it requires expert witness and discovery which is expensive.
• Privacy / Confidentiality – Some disputes may involve sensitive topics which the parties will want it to be not leaked in public. The arbitration process involves the disputes to be heard at a private place or an office and only the parties in dispute are present.

Disadvantages of an Arbitration Clause

• Unawareness – Generally the other party signing the contract is not aware of the arbitration clause and becomes bound by it unintentionally. If the clause is binding, it means giving up the right to go to litigation and also the arbitration award cannot be appealed.
• Too expensive – Sometimes the dispute is complicated and the money involved is less, so the arbitration process becomes expensive.
• Biased – Generally the employment contract or the consumer contract is biased and is favorable for the Company.
• Informal Evidence – The procedure of evidence is informal in arbitration proceedings which may result in injustice.

The Common Pitfalls with arbitration clause

• Not all contracts are meant for arbitration – There are many contracts the disputes of which cannot be decided through arbitration. In case of a complex dispute where expert witness is required for deciding a claim, arbitration is not the method to settle the dispute. Therefore, it is advisable to consult a lawyer before signing the contract.
• Arbitration proves costly for the parties sometimes – Parties agreed to an arbitration clause by signing a general contract which has an arbitration clause. The parties should consult a lawyer before entering into a contract in order to know whether all the clauses are as per the subject matter of contract.
• The clause is vague at times – The arbitration clause should be clearly worded which should not cause any confusion in future. The contract should clearly mention in case of dispute in future, the same shall be referred to arbitration and not stating for arbitration as well as litigation. Therefore, the parties should thoroughly read each and every clause of the contract, because this is the only way by which the ambiguities in future can be avoided.

The jist

The Arbitration Agreement has to be necessarily in writing and with clear stipulations and procedures. The nature and location of arbitration along with the number of arbitrators and governing law must be at least clear.

It is always advisable to consult a lawyer and discuss the clauses in the contract or in order to avoid future confusion or misinterpretations.

The post What is an Arbitration Agreement? What is its purpose? appeared first on ODR Guide.

Is binding arbitration better than Courts? Binding arbitration is better than courts only in the case when disputants have a similar level of power, financial capacity, need confidentiality, and a special experience to settle the dispute.

Each dispute is unique in nature, therefore, it is not recommended to generalize. Some contracts are biased and in some cases, it is better for one or either party to go directly to litigation.

Also, arbitration and other ADR methods do not enforce rights but attempt to reach a settlement. Some disputes are not arbitrable or may involve severe compromise of rights which might result in injustice, for example: arbitrating a dispute between an Employer and Employee on maternity leave, which is clearly governed by law.

To understand Alternative Dispute Resolution better, you may review Alternative dispute resolution (ADR) and it’s advantages and disadvantages and Alternative Dispute Resolution: Does It Save Time and Money? and Writing a Construction notice of dispute. Free sample letter and What is an Arbitration Agreement? What is its purpose?

Difference between Binding and Non-Binding Arbitration

An arbitration proceeding is mostly for a civil dispute and not for disputes which are criminal in nature. Disputes arising out of an employment contract, business contract, child custody disputes, property disputes are few examples of a civil dispute which can be decided through the arbitration process.

It is generally considered advantageous for the parties if there is a binding arbitration clause as it is time-saving, less expensive, and flexible.

The parties in case of a small misunderstanding between them can get their dispute settled through a third person who is an arbitrator and the arbitrator is also decided by the parties.

With the growth of arbitration as a dispute settlement mechanism, the burden on the courts has also been reduced. This, in turn, saves the time of the court and disputing parties too.

The word binding means being legally obligated to do something and non-binding is when you are not obligated. Therefore, an award or the decision by a binding arbitration is final and non-appealable whereas in case of non-binding arbitration the parties are not bound by the award or the decision.

If the parties are not satisfied by the award of the arbitrator, they are free to move to court for litigation or any other form of dispute resolution mechanism.

The differences can be understood by comparing the two under various characteristics:

1. Binding – As the name also suggests, Binding arbitration is the one the decision of which is final on the parties and non-binding is one when the decision is not binding and the parties have the ability go litigation.
2. Complexity – The process of arbitration under binding arbitration clause is more complex than compared to non-binding clause. As the award is binding on the parties the process involves trial similar to a court trial.
3. Expensive – The binding arbitration is more expensive than that of non-binding arbitration as the process is more time taking in case of binding, so the cost of the proceeding also increases.
4. Speedy – The binding arbitration is more time taking as the process to decide is complicated and the dispute itself is complex, whereas in non-binding the dispute can be even settled in one meeting.

Real-life examples of binding ADR methods (binding mediation) can be encountered in most e-commerce platforms such as Alibaba.

Why an Arbitration Clause is Non-Binding in Some Contracts?

Generally, most contracts have a binding arbitration clause and in very rare cases it is non-binding.

A question comes to mind “why does non- binding arbitration clauses exist? why not just keep it always binding?”

An arbitration clause is kept non-binding at times due to certain reasons or benefits, such as:

• The parties get external guidance or directions to follow in dealing with the dispute.
• The relationship between the parties is not deteriorated due to going to court.
• The reputation of the parties is also not affected as the arbitration proceedings are done in private place.
• The parties get a clear picture of their differences before going to the court.

The benefits depend on the type of contract and also on the nature of the dispute.

For example, in Florida it is compulsory to take the dispute to non-binding arbitration before going to the court in order to understand the differences properly.

It is beneficial when there is a small dispute between the parties or when they need guidance or external opinion to settle their differences.

Pros and Cons of Binding Arbitration

As the arbitration clause is mostly binding and only in very few cases it is non-binding, therefore the benefits are similar to that of a contract with an arbitration clause.

The Pros of Binding Arbitration:

• Fast – As the process is ususally faster than Litigation, therefore the parties prefer to put the clause in the contract or an agreement. Also, as the award is binding the parties have no option to appeal as in case of non-binding. This also makes the binding arbitration faster.
• Appointment of Arbitrator/s – The binding arbitration is mostly in complex contracts where the knowledge of an expertise is required. The parties can appoint the arbitrator/s as per the nature of the dispute and the level of expertise required.
• Flexible – The binding arbitration clause is also flexible for the parties as the parties are free to choose the arbitrator of their choice and the say of the parties is also there. It is also flexible because laws of evidence are not followed strictly. The parties have more control on the arbitration proceedings.
• Less Expensive – The process of binding arbitration is less expensive as the award is binding on the parties and the parties have to abide by the same. In case of non-binding arbitration first the parties spend on arbitration and in case of no satisfaction (usually the case) refer the same dispute to litigation which increases the expenses of the parties.
• Privacy / Confidentiality – Some disputes may involve sensitive topics which the parties will want it to be not leaked in public. The binding arbitration process involves the disputes to be heard at a private place or an office and only the parties in dispute are present. The non-binding arbitration clause if referred to litigation can be open to public which in turn can affect the reputation of the parties and/or make private financial aspects public.

The Cons of Binding Arbitration:

• Unawareness– The contracts which are created by banks, credit card issuer or cell phone companies have the binding arbitration clause which the parties unknowingly sign and becomes bound by it. The parties unconsciously give away their right to go to courts and also the arbitration award cannot be appealed.
• Injustice – The parties when unknowingly sign the contract with binding arbitration clause, the other party is not in advantageous position as it might compromise rights entitled by law. This results in injustice to the other party as for example, it will not be able in future to join a class action suit against the Company.
• Too expensive – It is very common now a days of putting a binding arbitration clause in a Contract, which means even if it is a small dispute or a dispute involving a minimal amount it has to be referred to arbitration. For example a small misunderstanding between parties that could have been resolved amicably or by less advsearial methods such as mediation, the binding arbitration makes it compulsory for the parties to go for arbitration. Consequently, the process becomes expensive for the parties, which could have saved money otherwise.
• Biased – The binding arbitration is biased in favor of the company in case of consumer contracts and employer in case of employment contract. This also results in injustice.
• Informal Evidence – The procedure of evidence is informal in binding arbitration as it does not strictly follow the laws of evidence.

More about Pros and cons here.

Conclusion

Thus, we see that the binding arbitration clauses are mostly used in the contracts and by service providers such as Fiverr dispute center as compared to non-binding arbitration which is rarely found.

Before entering into an agreement, both parties must carefully understand the contract agreement’s scope of works, obligations, and risks associated. Depending on all these factors, they should strive to stipulate the most realistic and practical approach, either by choosing arbitration, other ADR methods, or litigation.

In addition, each party must be aware of the process of handling disputes within the contract in order not to waste time and cost due to procedural errors and nuisances.

You might be also interested to explore the arbitration and mediation hybrid “Mid-Arb” in Can arbitrators mediate? All you need to know about Mid-Arb, Arbitration and Mediation.

Hint: Our worldwide map for arbitration costs can assist you in estimating your arbitration fees.

The post What is Binding Arbitration? Is it better than Court? appeared first on ODR Guide.