Between Option And Obligation: The Supreme Courts Clears The Air On “CAN” In Arbitration Clauses

Introduction

Today’s business world involves complex, high-value, and often international transactions. Because of this, companies focus not just on making good deals, but also on having clear and efficient ways to resolve disputes if problems arise. Many see court litigation as slow, public, and rigid, so they often choose arbitration instead, which offers privacy, more control for the parties, and usually faster results. For these reasons, arbitration clauses are now a common part of commercial contracts, added as a risk-management step early on, well before any dispute comes up.

The effectiveness of this risk-management tool depends on how clearly the arbitration clause is written. While the law requires a clear and binding agreement to send disputes to arbitration, many clauses are drafted carelessly or simply copied from other contracts. The choice of words is especially important, particularly when deciding between mandatory terms like “shall” and permissive terms like “may”