Arbitration provisions in operating agreements and business contracts have become common place in Wisconsin. Arbitration is a form of alternative dispute resolution (ADR) from the public court systems. That means instead of going to court the parties submit to a private arbitrator to resolve the dispute.   The benefits of arbitration are that it is generally more efficient (quicker resolution than the court system), less complicated (the parties contract the rules of the arbitration), and cheaper. In Wisconsin, clauses requiring parties to a contract to submit disputes to arbitration rather than litigation are generally “valid, irrevocable and enforceable[.]” Wis. Stat. § 788.01. See Leavitt v. Beverly Enters., 2010 WI 71, ¶ 53, 326 Wis. 2d 421, 439. “[A]rbitration is a matter of contract,” and “the question of arbitrability is an issue for judicial determination.” Cirilli v. Country Ins. & Fin. Servs., 2009 WI App 167, ¶12, 322 Wis. 2d 238, 249, 776 N.W.2d 272. When a contract contains an arbitration clause, “[t]here is a strong presumption of arbitrability[.]” Cirilli at ¶14. Any ambiguity “concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Id.  

While Arbitration can be a favorable form of ADR, it is not without its drawbacks. For instance, you are not afforded the benefit of a jury in deciding your dispute and you may be required to have a single arbitrator who is potentially subjective.  Additionally, arbitration is binding and unlike the court system, there is no opportunity to appeal if you get an unfavorable ruling. While arbitration is generally cheaper, you are often subjected to fees no normally included in standard litigation such as arbitrator fees. There should be consideration in determining whether an arbitration agreement should be included in any contract. Leib Knott Gaynor has assisted clients who are in the process of crafting business contracts and are experienced in resolving business disputes which may lead to arbitration. If you have any questions, feel free to contact us at 414-276-2102.