BLINC or You'll Miss It: Arbitration Checklist for Your Business
BLINC sounds like a new social network or tech device, but it is a mnemonic device designed to remind you of the important factors when drafting an arbitration clause. It'll also help when you are reviewing a contract and reading someone else's terms.
If you don't BLINC you might miss all there is to get about these agreements. Increasingly arbitration agreements are a condition of closing deals and doing business. Know what you need to about these all-important alternatives to litigation.
BLINC Spelled Out
Eric Sherby specializes in international litigation and arbitration, and he advises familiarizing yourself with BLINC in the Journal of the American Bar Association. So let's spell it out.
- Broad: Your arbitration clause, says Sherby, should be broad, clear, and unambiguous. Leave it vague and you will pay with higher legal fees as the parties try to figure out what was meant and interpret according to their interests.
- Law: Choose it. Do not forget a choice-of-law clause that specifies which law applies to your arbitration agreement.
- Institutions: Pick one. Whether local, national, or international, specify the arbitration association charged with resolving your disputes. Do not let arbitration be ad hoc at a time when there is trouble. There are general arbitration institutions and industry-specific groups.
- Number of Arbiters: The more the merrier and more expensive, so pick the number of arbiters who will decide a case but keep in mind the old adage about quality and quantity. You may be better off with just one judge.
- Costs: Who is paying for all this alternative dispute resolution? Arbitration is less expensive than litigation traditionally but it still gets expensive. Beware that arbiters may shift costs of legal fees to the loser, and this is particularly likely to happen internationally, Shelby says.
Get Help Drafting
You could use help resolving disputes in the future and shouldn't hesitate to turn to arbitration. But to ensure that you are getting the best alternative dispute resolutions you can, get help setting up the conditions. Talk to a lawyer about drafting a model arbitration clause or any other aspect of business operations that concerns you. Don't do it all alone.
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