When Is A Party Required To Arbitrate?

Over the past few decades, arbitration agreements have become increasingly common in contracts between corporations, workers and customers. In fact, you've likely agreed to one in signing a generic consumer agreement or by checking a terms and conditions box. They are also commonplace within global contexts, such as in international contracts between foreign investors and sovereign nations.

In an arbitration clause, the parties are agreeing to forgo litigation in domestic courts and to instead resolve disputes through arbitration. For example, if two companies enter into a contract for the sale and purchase of goods and the contract contains an agreement to arbitrate disputes, the companies are obligated to resolve any dispute through arbitration. However, before jumping to arbitration, it's important to carefully read the arbitration agreement between the parties to ensure that the agreement to arbitrate applies to the particular dispute at issue.