Arbitration Exclusion Clause

Arbitration Exclusion Clause

An Arbitration Exclusion Clause is a provision in a contract that explicitly states that disputes arising under the agreement will not be resolved through arbitration. Instead, such disputes may be handled through litigation in a court of law or through negotiation, mediation, or other alternative dispute resolution methods, but not through arbitration.

The inclusion of an Arbitration Exclusion Clause allows the parties to retain the right to pursue legal action in court, preserving the option for a formal trial process. This clause may be advantageous for parties who prefer the procedural protections and potential jury involvement offered by litigation, or for those who may be apprehensive about the arbitration process, which can be perceived as less formal and sometimes lacking in transparency.

For example, in a commercial lease agreement, the landlord and tenant might decide to include an Arbitration Exclusion Clause to ensure that if a dispute arises regarding the terms of the lease, either party can take the matter to court rather than being compelled to arbitrate. This can provide both parties with a sense of security regarding their rights and the potential outcomes of a dispute.

In summary, the Arbitration Exclusion Clause serves as a clear directive within a contract that delineates how disputes will be handled, favoring traditional court proceedings over arbitration.