Arbitration has become an increasingly popular method of resolving disputes outside the traditional courtroom setting. This private and flexible process allows parties to settle conflicts efficiently, often saving time and money. But not all disagreements can be handled this way. Understanding what you can arbitrate is essential for businesses, consumers, employers, and individuals who want to avoid litigation. Arbitration is usually limited to matters involving rights that parties can voluntarily agree to submit for resolution. Knowing the scope of arbitrable issues helps determine whether arbitration is the right path for a specific conflict.
General Definition of Arbitration
Arbitration is a form of alternative dispute resolution (ADR) where a neutral third party, known as an arbitrator, makes a binding or non-binding decision after hearing both sides of a disagreement. Unlike court cases, arbitration can be conducted confidentially and informally, and it is governed primarily by the agreement between the disputing parties.
To initiate arbitration, both parties must have previously agreed either through a clause in a contract or a post-dispute agreement that any issues arising between them would be handled by arbitration rather than litigation.
Criteria for Arbitrable Matters
Not every issue can be submitted to arbitration. For a matter to be arbitrable, it must meet certain conditions:
- Consent: Both parties must agree to arbitration voluntarily.
- Legal capacity: The matter must involve private rights that parties can legally waive or negotiate.
- Public interest: Issues that involve public policy or criminal offenses generally cannot be arbitrated.
When these criteria are met, a wide range of disputes can be resolved through arbitration.
Commercial Disputes
One of the most common categories of arbitrable matters involves commercial disputes. Businesses often include arbitration clauses in their contracts to ensure quicker and less costly resolution of conflicts that may arise in the future.
Examples of Commercial Disputes You Can Arbitrate
- Breach of contract
- Disputes over delivery of goods or services
- Intellectual property disagreements between private parties
- Payment disputes involving vendors or suppliers
- Non-compete or confidentiality clause enforcement
International business agreements often rely on arbitration to handle cross-border conflicts because it provides a neutral forum and avoids the complexities of litigating in a foreign court.
Employment Disputes
Employment arbitration is another common area where arbitration is widely used. Many employers include arbitration clauses in employment contracts, requiring disputes between employer and employee to be resolved without going to court.
Arbitrable Employment Matters
- Wrongful termination claims
- Discrimination or harassment allegations (if permitted by law)
- Wage and hour disputes
- Contractual disputes related to severance or benefits
- Non-disclosure or trade secret violations
Some states limit the extent to which discrimination and harassment claims can be compelled to arbitration, so it’s important to review applicable laws in your jurisdiction.
Consumer Disputes
Consumers often encounter arbitration clauses in agreements related to financial services, software licenses, product purchases, and online services. These clauses are designed to handle any complaints or disputes privately through arbitration rather than litigation or class-action lawsuits.
Typical Consumer Matters You Can Arbitrate
- Billing or service complaints with utilities or subscription services
- Defective products or warranties
- Disputes with banks or credit card companies
- Online transaction problems
- Loan or mortgage contract disputes
Federal and state laws may place limits on enforceability, especially when arbitration clauses are deemed unfair or when consumers were not adequately informed.
Real Estate and Construction Disputes
Disagreements involving real estate and construction projects often benefit from arbitration due to the technical nature of the issues and the need for industry-specific expertise.
Examples of Real Estate Disputes Suitable for Arbitration
- Construction delays or defects
- Disputes over contract terms with builders or contractors
- Brokerage commission disputes
- Lease agreement violations (if permitted)
- Title or boundary issues between private landowners
However, some issues involving real property, such as foreclosure proceedings or certain landlord-tenant matters governed by statute, may not be subject to arbitration.
Partnership and Shareholder Disputes
Partnerships and corporations may face internal disagreements between partners, members, or shareholders. These disputes are often suitable for arbitration, especially when the parties wish to maintain business relationships or avoid public scrutiny.
Arbitrable Internal Business Disputes
- Profit-sharing and accounting disputes
- Breach of fiduciary duty
- Disputes over voting rights or management control
- Valuation and buyout disagreements
- Disputes involving ownership interests
By including arbitration clauses in partnership agreements, operating agreements, or shareholder agreements, businesses can create a clear path for resolving internal conflict.
Family and Domestic Disputes
Some family-related matters may also be resolved through arbitration. In jurisdictions that allow it, arbitration offers a private and often less adversarial alternative to family court.
Family Matters That Can Be Arbitrated
- Division of property in divorce (if permitted)
- Spousal support or alimony terms
- Prenuptial or postnuptial agreement enforcement
- Inheritance and estate-related disputes among family members
However, custody, visitation rights, and child support are generally excluded from arbitration in most jurisdictions, as courts retain oversight of children’s best interests.
Limitations: What You Cannot Arbitrate
While many private matters are subject to arbitration, certain disputes are categorically non-arbitrable due to public interest or legal restrictions.
Non-Arbitrable Issues
- Criminal charges and penalties
- Family law issues involving custody or child welfare
- Immigration or citizenship status
- Bankruptcy proceedings
- Claims involving statutory rights that are non-waivable (depending on jurisdiction)
Courts generally retain exclusive authority over these matters because they involve public interest, government enforcement, or personal liberties that cannot be privately negotiated.
Arbitration provides a flexible, efficient, and private way to resolve many types of legal disputes. From business contracts and employment issues to consumer complaints and internal business conflicts, there is a wide range of matters that you can arbitrate. However, knowing the boundaries is equally important. Legal restrictions and public policy concerns can place certain subjects beyond the reach of arbitration. Before entering into or enforcing an arbitration agreement, it is wise to consult legal counsel to ensure that the matter at hand is indeed arbitrable. With proper use, arbitration can be a valuable tool for fair and efficient dispute resolution.