What Is Mandatory Arbitration?

Table of Contents

Share at:

Have you ever been through mandatory arbitration or has a court directed you to go through mandatory arbitration? In the past, we covered generally what arbitration is, but in this article, we will specifically look at mandatory arbitration. To refresh, arbitration is an alternative to litigation. Arbitration involves an independent person, known as an arbitrator, deciding a dispute between two parties. The arbitrator’s decision is called an award, which will be enforced by the Court, much the same as a judge’s decision will be.   

What is it?

Mandatory arbitration is when a court directs two parties to arbitrate, regardless of whether they change their mind and no longer want to. A court will do this when there is a clause within the contract, known as an arbitration clause, stating that both parties agree to arbitrate when irreconcilable issues arise.

Who runs the mandatory arbitration?

In most cases, the arbitration clause will state who is going to arbitrate. However, the clause can also state that parties will agree to who will arbitrate at a later date. This is an agreement to agree clause. If the arbitration clause does not include either one, then the arbitration clause most likely will not apply.

Can a court order arbitration?

A court will not order arbitration specifically, but it can order parties to use alternative dispute resolution. Arbitration is a form of alternative dispute resolution, but it is not the only one. Conciliation and mediation are other forms of it. When courts order parties to commence alternative dispute resolution, the intention is for parties to negotiate their differences. If this fails, then the parties will return to the court to litigate their dispute.

What if you do not want arbitration?

Before signing any contract make sure you or your lawyer checks for an arbitration clause. If there is one, check if it has been drafted correctly. If it has, then you will need to go to mandatory arbitration.

Courts enforce mandatory arbitration when the contract between the two parties has a properly drafted arbitration clause. If an arbitration clause exists in a contract you are reviewing or if you want to draft one, you should seek legal advice.  

Don’t know where to start? Contact us on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest lawyer marketplace.

                

Share at:

Simplify creating legal documents today

Browse through Lawpath's AI tools which can be used to draft, review and refine legal documents today!

Related Articles

Your Guide to Launching an App (2026 Update)

Have you ever thought about launching an App? Find out the legal, marketing and development processes you need to follow here.

What to Do if You’ve Been Overpaid by Your Employer

Your employer has overpaid you. Can you keep the money? Do you have to report the overpayment? Keep reading to find out what your obligations and rights are.

What Is the Meaning of Time in Lieu (TOIL)?

Have you ever wondered what time in lieu means? This post will cover everything you need to know.

What is an Incorporated Business?

There are many benefits to having an incorporated business. In this article we explore the concept and process of business incorporation.

What are Set-Off Clauses in Employment Contracts?

To set-off or not to set-off, that is the question.

Personal Liabilities Of Company Directors: Everything You Need to Know

How to prevent yourself as a company director from being personally liable: 101 Guide