What Does Mutual Agreement to Arbitrate Mean

As our world becomes increasingly connected and digital, the need for agreements and contracts has also grown rapidly. One common clause found in many contracts is the mutual agreement to arbitrate. This clause specifies that any disputes between the parties involved will be resolved through arbitration, rather than through the court system.

But what exactly does mutual agreement to arbitrate mean, and why is it so important? In this article, we`ll take a closer look at this clause and explore its benefits and drawbacks.

What is Arbitration?

Before diving into the mutual agreement to arbitrate, it`s essential to understand what arbitration actually is. Simply put, arbitration is a form of alternative dispute resolution (ADR) that involves two parties who cannot resolve their dispute themselves. In arbitration, a neutral third party (the arbitrator) is appointed to hear both sides of the dispute and make a final decision.

Arbitration is often carried out in private and is generally faster and less expensive than going to court. It is also often less formal than a court proceeding, which can make it more flexible and efficient.

What is a Mutual Agreement to Arbitrate?

A mutual agreement to arbitrate is a clause included in a contract that requires both parties to resolve any disputes through arbitration rather than going to court. This clause is a legal agreement between the parties, and it is usually binding.

The agreement may specify various details about the arbitration process. For example, it may indicate which organization will provide the arbitrator, the location of the arbitration, and the timeline for the process.

Why Include a Mutual Agreement to Arbitrate?

There are several reasons why parties may choose to include a mutual agreement to arbitrate in their contract. Here are a few of the most common reasons:

1. Confidentiality: Arbitration is often private, which means that details about the dispute will not be made public. This can be especially important for businesses that want to keep sensitive information confidential.

2. Efficiency: Arbitration can be faster and less expensive than going to court, which can be beneficial for all parties involved.

3. Expertise: The parties involved in the dispute may be able to select an arbitrator with specific expertise in the relevant area, which can lead to a more informed and fair decision.

4. Finality: Unlike court cases, the outcome of an arbitration is usually final and cannot be appealed. This can provide a sense of closure and finality that parties may not get through the court system.

Drawbacks of a Mutual Agreement to Arbitrate

While there are many benefits to a mutual agreement to arbitrate, there are also some potential drawbacks that should be considered.

1. Limited review: In arbitration, there is usually limited review of the arbitrator`s decision. This means that mistakes or errors in the decision are unlikely to be corrected.

2. Limited discovery: Discovery (the process of obtaining evidence) in arbitration may be more limited than in a court case, which can make it more difficult to build a strong case.

3. Lack of precedent: Because arbitration decisions are usually private and final, they do not set a legal precedent that can be used in future cases.


A mutual agreement to arbitrate can be a smart choice for parties who want to resolve disputes quickly, efficiently, and privately. However, it`s important to consider the potential drawbacks as well and to ensure that the terms of the agreement are clear and fair to both parties.

As with any legal document or agreement, it`s always a good idea to consult with a qualified attorney before signing on the dotted line. They can help you understand the legal implications of the mutual agreement to arbitrate and ensure that your rights and interests are protected.