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What Happens If I Sue After Signing an Arbitration Clause?
An arbitration clause is a contract tool to avoid costly and lengthy litigation proceedings. Parties entering into an agreement usually include such clauses for a range of transactions and situations, including employment, sales, repairs, insurance, etc. The clause basically outlines how the involved parties agree to seek resolutions to disputes through arbitration services first before resorting to pursuing a remedy in court.
Nevertheless, injured parties may feel that they will be better served by suing their counterparties rather than continuing to arbitration as set in said clauses. However, with an arbitration clause in place, parties may still have to go through arbitration first regardless.
What Is the Arbitration Clause?
Arbitration is a form of alternative dispute resolution (ADR) whereby a neutral third-party arbitrator, or sometimes more than one, oversees a proceeding and determines the resolution. This sounds similar to litigation, but it is still very different. While arbitrators are like judges who listen to arguments and weigh evidence, the procedure is much more informal, usually completely confidential, and typically less expensive and more expedient than litigation.
An arbitration clause demonstrates that the parties in an agreement or contract recognize that disputes may arise between them and that they agree to resolve any disputes through arbitration. These clauses can be part of a larger agreement or stand alone as an agreement unto itself. Either way, arbitration clauses and agreements are independent through the “Doctrine of Separability”. This means that if the arbitration clause or agreement is part of another agreement and that other agreement is deemed invalid for any reason, the arbitration piece remains valid.
Arbitration clauses and agreements have standard language and templates that professionals can use. The Thailand Arbitration Center (THAC) has arbitration clause samples that parties can use in their contracts or agreements, such as:
Any dispute, controversy or claim arising out of or relating to this contract or the breach, termination or invalidity thereof shall be referred to and finally resolved by arbitration in accordance with the Arbitration Rules of the Thailand Arbitration Center for the time being in force and the conduct of the arbitration thereof shall be under the administration of the Thailand Arbitration Center.
Are Arbitration Clauses Legally Binding?
In general, arbitration clauses are legally binding in that the relevant parties must participate in arbitration before litigation, according to the terms of the arbitration clause or agreement. As mentioned above, even if the overarching agreement or contract in dispute has been breached, the included arbitration clause or agreement is still legally binding and valid due to the Doctrine of Separability.
Typically, when speaking about binding and non-binding arbitration clauses, this usually refers to whether the result of the arbitration is legally binding or not.
What Happens If I Sue After Signing an Arbitration Clause?
If you sue after having signed an arbitration clause, usually you will still have to go through the arbitration process first. However, if your arbitration clause is binding, you may have limited recourse to proceed to litigation after that arbitration.
A binding arbitration clause not only forces disputing parties to arbitration, but by signing the clause, the parties waive their right to litigate and agree to accept the arbitrator’s decision. In many cases, the binding arbitration clause does not allow for parties to appeal the arbitrator’s award as well, except for cases of fraud or illegality. Language for a binding arbitration clause could include:
Any dispute arising out of this Agreement, or any breach thereof, shall be settled by arbitration pursuant to the Arbitration Rules of the Thailand Arbitration Center and judgment on the award rendered by the Arbitrator(s) shall be binding, conclusive and non-appealable and may be entered in any court having jurisdiction thereof.
A non-binding arbitration clause is as it sounds. The parties agree to try to resolve conflicts through arbitration, but they do not agree to be legally bound to the arbitrator’s decision. In these cases, either party can pursue remedy in court if they are unhappy with the arbitration results. Parties often choose non-binding arbitration clauses for straightforward issues or for when they want to seek guidance through a neutral third party. Sometimes, non-binding arbitration facilitates improved working relationships between parties. However, if things do deteriorate, parties are then better informed about the matter in dispute and can strategize with legal counsel accordingly. Language for a binding arbitration clause could include:
…non-binding arbitration with the parties free to not accept the decision of the arbitrator and to seek satisfaction through other means, including litigation.
THAC Can Assist with Binding and Non-Binding Arbitration
THAC is an internationally recognized dispute resolution center offering affordable, state-of-the-art facilities and services for in-person and remote proceedings. Founded in 2015, THAC provides arbitration, negotiation, and mediation services for local and cross-border disputes as well as for personal and commercial conflicts. The center allows access to a range of subject-matter experts skilled in arbitration, mediation, and negotiation. Centrally located near the Phrom Phong BTS station and with easy access to major roads and highways in Bangkok, the THAC is an ideal location for parties travelling locally or from the city’s major international airports. For those who cannot travel to the center, THAC offers advanced online dispute resolution services, including an innovative TalkDD platform.
About THAC
The Thailand Arbitration Center (THAC) is a leading alternative dispute resolution (ADR) center, offering state-of-the-art facilities to accommodate a range of ADR solutions, including online dispute resolution (ODR). We offer access to experienced neutral third-party arbitrators and mediations, who are well-versed in ADR and expert in various industries and sectors for specialized knowledge. Located in central Bangkok near major roads and highways as well as the Phrom Phong BTS Skytrain station, THAC is ideally located for local and cross-border disputes and provides international-level ADR services, affordable administration fees, and well-equipped facilities for in-person and remote hearings. For more information on how THAC can help you mitigate or arbitrate your business or personal disputes, please contact THAC at [email protected] or +66 (0)2018 1615.
