Question 1

Can you refuse an arbitration clause in a contract?

Accepted Answer

You can try to negotiate it out before signing. But if you've already signed a contract with an arbitration clause, you're generally bound by it. Some consumer and employment arbitration clauses have been struck down by courts as unconscionable — but for most business contracts, they hold up.

Question 2

Is arbitration better than going to court?

Accepted Answer

It depends on your situation. Arbitration is faster (months vs. years) and cheaper (no lengthy discovery process). But you lose the right to appeal, there's limited evidence exchange, and arbitrators sometimes split the difference rather than ruling clearly for one side. If your case is strong and the amount is large, court might be better.

Question 3

How much does arbitration cost?

Accepted Answer

AAA filing fees range from $200 for claims under $75,000 to $3,350 for claims over $500,000. Arbitrator fees run $1,500–$3,000 per day. Compare that to litigation, which can easily cost $50,000–$100,000+ in legal fees. For smaller disputes, arbitration is almost always cheaper.

Question 4

Can you appeal an arbitration decision?

Accepted Answer

Almost never. Arbitration awards are final and binding. Courts will only overturn them in extreme cases — like if the arbitrator was corrupt or ignored the law entirely. This is the biggest trade-off: you get speed, but you lose your safety net.

Question 5

What's the difference between binding and non-binding arbitration?

Accepted Answer

Binding arbitration means the decision is final — both parties must accept it. Non-binding arbitration is more like a formal opinion: either party can reject the result and go to court. Most contract clauses specify binding arbitration. Non-binding is rare and basically just an expensive preview of what a judge might decide.

Question 6

What happens if you ignore an arbitration clause?

Accepted Answer

If you file a lawsuit instead of going to arbitration, the other side will ask the court to dismiss your case and force you into arbitration. Courts almost always grant this if the arbitration clause is valid. You'll waste time and legal fees fighting a battle you'll likely lose.

Arbitration

Definition

In Practice

Common in these contract types

Related terms

Frequently asked questions about arbitration

Create a contract with proper arbitration clauses