What is a U.S. Model Arbitration clause?
A U.S. Model Arbitration Clause is an agreement that parties to a dispute enter into that requires arbitration as the sole method of dispute resolution. This type of clause is often included in contracts to help avoid costly and time consuming litigation. In North Carolina, a U.S. Model Arbitration clause is created in accordance with the rules set out in the Federal Arbitration Act, which was adopted by Congress in 1925. This law governs the enforcement of arbitration clauses throughout the U.S., including North Carolina. A U.S. Model Arbitration clause typically requires the parties to agree to have any disputes that arise between them resolved by an arbitrator, rather than going to court. This eliminates lengthy and expensive legal proceedings, as well as provides an informal and expedited way to settle disputes. The clause usually identifies the type of arbitrator to be used (usually a third-party neutral) and how the arbitration process will proceed. It will also often include language that requires the parties to share the cost of arbitration, as well as a requirement that the arbitrator’s award will be final and binding. In North Carolina, a U.S. Model Arbitration clause can be an effective way to resolve disputes without going to court. This clause can be adapted to fit the particular needs of all parties involved, making it a useful tool when entering into contracts in the state.
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