Unilateral Arbitration Provision

Unilateral Arbitration Provision

A unilateral arbitration provision is a clause in a contract that mandates arbitration for disputes but allows only one party the discretion to initiate that process. This means that while one party (usually the stronger or more sophisticated party) has the right to compel arbitration for any disputes that arise, the other party must accept this decision without the reciprocal right to initiate arbitration themselves.

In practical terms, a unilateral arbitration provision often appears in agreements such as employment contracts, consumer contracts, or service agreements. For example, a company may include a unilateral arbitration provision in its employment contracts stating that only the company can choose to arbitrate disputes arising from the employment relationship, while the employee cannot initiate arbitration but must accept the company’s decision if it chooses that route.

This type of provision can raise concerns regarding fairness and balance in contractual relationships, as it may disadvantage the party without the ability to compel arbitration. Critics argue that it may create an imbalance of power, as the party with the unilateral right has more control over the resolution process.