High-Low Arbitration Agreement

High-Low Arbitration Agreement

A High-Low Arbitration Agreement is a contractual arrangement used in the context of arbitration to establish predetermined limits on the potential damages awarded to the parties involved. This type of agreement is often utilized in personal injury or wrongful termination cases, where the parties may want to avoid the uncertainty of a jury trial.

In a High-Low Arbitration Agreement, the parties agree on two amounts: a "high" amount, which represents the maximum possible award, and a "low" amount, which is the minimum that will be awarded regardless of the arbitration outcome. During the arbitration process, the arbitrator will hear the evidence and make a decision on the appropriate award based on the merits of the case. However, the final award will be capped at the high amount and cannot fall below the low amount.

For example, if the parties agree to a high amount of $500,000 and a low amount of $100,000, the arbitrator may determine the damages to be $300,000 based on the evidence presented. In this case, the award would be $300,000, as it falls between the specified high and low limits. Conversely, if the arbitrator awards $600,000, the final award would be adjusted down to the high limit of $500,000.

This agreement benefits both parties by providing a level of predictability in the arbitration process, encouraging settlement, and minimizing litigation risks.