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For instance, if a contract calls for arbitration, but is hedged with numerous caveats and contingencies, does that make the agreement over arbitration narrow? If the contract calls for arbitration, but allows that parties "to seek any other remedies available under law or equity" is that a broad or narrow arbitration agreement?

Suppose one party wants to arbitrate more than the other. How does a broad versus narrow arbitration agreement affect the first party's chances of going to arbitration?

For instance, articles like this one do explain the difference between broad and narrow arbitration clauses, but I don't have enough of a legal background to interpret the rather technical language.

Libra
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1 Answers1

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Here is a sample clause for a broad scope of an arbitration clause: "Any dispute, controversy, or claim relating to, connected with, or arising out of this Agreement..." Here are two for narrow scope:

“All disputes arising under this Agreement...” [precludes arbitration of matters that, while related to the agreement, do not arise out of it] “Any dispute, controversy, or claim relating to, connected with, or arising out of this Agreement, including any question regarding its existence, validity, or termination, but with the exception of claims arising under Article ___ of this Agreement....” [precludes specific claims, even if they arise out of the agreement]

So, there is a contract and a dispute comes up. A broad clause will include, of course, contract disputes, but also perhaps torts or other claims related to that contract. A narrow clause will include certain disputes and can exclude others from arbitration. Narrow clauses will usually list out specific issues that should be sent to arbitration.

Also of note: there is usually a presumption in favor of arbitrability. Should there be a dispute over whether a claim should or is allowed to be submitted to arbitration, absent clear and convincing evidence otherwise, it will be decided in favor of arbitration.

In-depth reasoning as to why arbitration clauses should typically be broad as opposed to narrow is available here: http://arbitrationblog.kluwerarbitration.com/2012/05/25/scope-of-arbitration-clauses-and-carve-out-clauses-erring-on-the-side-of-caution-or-on-the-side-of-daring/.

With respect to your second paragraph question: a broad arbitration clause makes more things potentially available for a party to bring to arbitration. Therefore, if Party A wants to arbitrate and Party B does not, a broad arbitration clause favors Party A's interests.

A.fm.
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  • Suppose the contract reads, "in the event of X, either party may seek relief under law or equity." X occurs. Does that narrow an otherwise broad clause? – Libra Oct 09 '17 at 18:21
  • I don’t think it is a matter of narrowing something that is otherwise broad. The clause as written is on the one hand broad because it is referencing legal actions outside of arbitration itself, for instance an injunction which would be considered an equitable remedy. Equitable relief is only granted when damages ($$$) are not an adequate remedy. If X is the only event that may lead to an action, then yes, that is narrow. However, there is no “broad” alternative that it is being narrowed from, as far as I can tell from what I’ve read so far. – A.fm. Oct 09 '17 at 20:02
  • A typical example of a "narrow" arbitration agreement might be found in a buy-sell agreement that calls for the buyout of a manager's stock in a closely held company upon death at fair market value as of the date of death as determined by mutual agreement with an arbitrator chosen by some specified method determining the fair market vale as of the relevant date if the parties fail to reach a mutual agreement within X days. It might even specify, for example, that minority interest discounts and control premiums are to be disregarded in reaching the value. – ohwilleke Oct 09 '17 at 20:27