Free arbitration agreement template

How to fill it in

Most of the document is ready to sign. The bracketed terms cluster into a handful of real decisions, and Schedule 1 at the back exists so you can settle them in one place before you start editing. Work through them in this order.

• Underlying Agreement: name the contract or relationship this covers. Vagueness here is the single most common reason a party later argues a claim falls outside the clause.
• Administrator and rules (clause 5): the two most used US providers are the American Arbitration Association and JAMS. Name one, and name the specific rule set, because each provider runs several with different fee schedules.
• One arbitrator or three (clause 6): one for almost everything. Three roughly triples the arbitrator cost and is worth it only where the amount at stake is large enough that a panel is cheaper than the risk of one wrong decision.
• Seat (clause 7): the city and state where hearings happen and whose courts supervise the arbitration. Pick somewhere both sides can actually get to.
• Fee allocation (clause 11): decide before there is a dispute. A party that has to fund half the arbitrator's daily rate up front may simply be unable to bring a claim, and that is a live argument against enforcement.
• Governing law (clause 21): the state whose contract law the arbitrator applies. Keep it consistent with the underlying contract.
• Clause 4, mediation: keep it or replace its text with "Intentionally omitted." Do not delete the clause outright, because later clauses refer back by number. Mediation resolves a good share of disputes for a fraction of the cost, so think twice before cutting it.

The claims you cannot force into arbitration

A signed arbitration agreement does not reach everything, and a template that pretends otherwise sets a business up to lose a motion it did not need to file. Three limits matter in practice.

• Sexual assault and sexual harassment claims. Since March 2022, 9 U.S.C. 402 says that at the election of the person alleging the conduct, "no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable" as to that case. The claimant chooses. An employer cannot insist on arbitration for that case, and cannot bargain the choice away up front. It reaches agreements signed before the statute passed, because what matters is when the dispute arose. Section 402(b) also sends the question of whether the statute applies to a court, and it says so "irrespective of whether the agreement purports to delegate such determinations to an arbitrator". A delegation clause does not move that decision.
• Certain transportation workers. Section 1 of the FAA excludes "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce". In Bissonnette v. LePage Bakeries (12 April 2024) the Supreme Court held a worker "need not work in the transportation industry to be exempt under section 1". What matters is the work the person actually does with goods moving across state lines. The drivers in that case delivered baked goods.
• Anything a statute makes non-waivable in advance. Clause 15 says so expressly, and it also preserves the right to file a charge with a government agency. Blocking that route is a good way to make the whole clause look overreaching to a judge.

What arbitration actually costs, and who pays

Court filing fees are a few hundred dollars. Arbitration is priced differently: the parties pay the arbitrator's time, and in a commercial case that is real money. The published caps are worth knowing before you write the fee clause, because in consumer and employment cases the provider will not let the company shift the cost anyway.

• AAA consumer cases: the AAA states that "the most the consumer would be asked to pay for a AAA consumer arbitration case is $225", with the business covering the remaining administrative fees and all of the arbitrator's compensation.
• AAA employment cases: the employee's administrative filing fee is capped at $350, with the employer paying the balance and the arbitrator.
• JAMS consumer cases: under the JAMS Consumer Minimum Standards, where the consumer brings the case "the only fee required to be paid by the consumer is $250", and where the company brings it the company pays everything.
• Commercial cases between two businesses have no such cap. Fees scale with the amount claimed and the arbitrator bills by the day or the hour, so a mid-sized commercial arbitration can run past what the same case would cost in court.
• Clause 11 is written around that asymmetry. It allocates fees between two businesses and defers to the provider's caps rather than trying to override them, because an attempt to override them is one of the surest ways to have a clause struck.

Class action waivers, and what happens when one fails

Clause 14 is why many companies want an arbitration agreement in the first place. It is enforceable as a general matter: in Epic Systems Corp. v. Lewis (21 May 2018) the Supreme Court held that agreements requiring individualised proceedings must be enforced according to their terms, and that neither the FAA's saving clause nor the National Labor Relations Act supplies a ground to refuse. Drafting still goes wrong in two places.

• The severance rule. If a court decides the waiver cannot reach a particular claim, what happens next should be written down. Clause 14 sends that claim to court and keeps everything else in arbitration. Clauses that instead void the entire arbitration agreement whenever any part of the waiver fails have handed claimants a route out of arbitration altogether.
• California PAGA. In Viking River Cruises v. Moriana (15 June 2022) the Supreme Court held the FAA preempts California's rule against splitting a PAGA action into individual and non-individual claims, so the individual part can be compelled to arbitration. A lot of pages stop there and repeat the Court's further suggestion that the rest then fails for lack of standing. California's own Supreme Court rejected that reading in Adolph v. Uber Technologies (17 July 2023), holding that an employee compelled to arbitrate individual PAGA claims still "maintains statutory standing to pursue PAGA claims arising out of events involving other employees" in court. If a page tells you a PAGA case disappears once the individual claim goes to arbitration, it is three years out of date.
• Mass filings. Where an agreement covers thousands of similar customers or workers, claimants' firms now file large batches of near-identical individual demands, and the per-case administrative fees land on the company all at once. If your clause could apply at that scale, ask your provider how it handles batched filings and what it charges before you name it in clause 5.

Where these agreements get struck down

Section 2 of the FAA preserves "such grounds as exist at law or in equity for the revocation of any contract". Unconscionability is the one that does the work, and it usually turns on the same short list of features. The template avoids all of them by design, so a reader editing it should be careful not to add them back.

• One-way arbitration. If one side must arbitrate and the other keeps the right to sue, expect a fight. Clause 1 binds both parties.
• Costs that make a claim impossible to bring. Requiring an individual to advance half of a five-figure arbitrator deposit is a familiar reason for refusing enforcement.
• A stacked arbitrator selection process, or a provider chosen and paid for by one side alone.
• Discovery so thin that a claimant cannot prove a case that depends on the other side's documents. Clause 9 sets a floor and lets the arbitrator expand it.
• Remedies stripped out. A clause that bars punitive damages or statutory attorney's fees otherwise available takes away a right the legislature granted. Clause 10 gives the arbitrator the same range of relief a court would have.
• A limitation period shortened well below the statutory one. Clause 16 keeps the ordinary period.
• Burying it. Some states require that a waiver of the right to sue be stated clearly enough that an ordinary reader understands what is being given up. The acknowledgment block with initials lines exists for exactly that reason.

California's 30-day fee rule catches drafters out

If your governing law is California, or the arbitration is seated there, there is a trap worth knowing about. Code of Civil Procedure section 1281.97 provides that where the fees to start an arbitration "are not paid within 30 days after the due date the drafting party is in material breach" of its own arbitration agreement. Section 1281.98 applies the same 30-day rule to fees needed to keep a pending arbitration going. The consequence is not a warning letter. The drafting party is in default and waives its right to compel arbitration, and the employee or consumer can then withdraw and sue in court with the limitation period tolled, or stay in arbitration and have the drafting party pay their reasonable attorney's fees and costs. Under 1281.98 the court must also impose sanctions, and the arbitrator can order monetary, issue, evidence or terminating sanctions. Companies have lost the benefit of an otherwise valid clause over an invoice that sat in accounts payable. If you are the drafting party, treat a provider invoice as a hard deadline rather than a bill.

Arbitration agreement compared with a forum selection clause

These two get confused because both answer the question "where does a dispute go". They do very different things, and the difference decides whether you get a jury.

• A forum selection clause keeps the dispute in the public court system and simply picks which court. Discovery, motions, appeals and a jury all remain available.
• An arbitration agreement takes the dispute out of that system. A private arbitrator decides, the hearing is not public, and the right to a jury is gone for the claims it covers.
• Review is the sharpest difference. A trial court's error can be corrected on appeal. An arbitrator's award can be vacated only on narrow statutory grounds, and being plainly wrong on the law is generally not one of them. Finality is the main attraction until an award goes against you, at which point it is the main risk.
• Do not leave both in your contracts. In Coinbase, Inc. v. Suski (23 May 2024) the parties had one contract with an arbitration and delegation clause and a later one sending disputes to California courts, and the Supreme Court held a court, not an arbitrator, must decide which contract governs. Clause 19 addresses this directly so the question does not arise.
• A jury waiver clause is a third, narrower option: it stays in court, before a judge alone. How readily a pre-dispute jury waiver is enforced varies by state, and in some it is treated far more sceptically than an arbitration clause, so check your governing-law state before relying on one.

Signing it, and what happens when a dispute starts

This is an ordinary contract. It takes effect when both parties sign, it can be signed electronically under the ESIGN Act and state UETA equivalents, and no notary is involved. Sign it at the same time as the underlying contract wherever you can, because an arbitration agreement produced after a relationship has soured invites an argument that there was no consideration for it. Keep the completed Schedule 1 with the signed document; six months later nobody remembers which rule set was chosen. When a dispute arises, clause 3 comes first: a written Notice of Dispute and a conference period. It is a condition precedent, so skipping it hands the other side something to complain about, and the limitation period is tolled while it runs. If a party sues in court anyway, the other can move to compel arbitration. In Smith v. Spizzirri (16 May 2024) the Supreme Court held that where a stay is requested, section 3 "compels the court to stay the proceeding" rather than dismiss it, so the case sits paused and the parties can return if arbitration does not finish the job. Once the award is issued, clause 17 lets either party enter judgment on it in any court of competent jurisdiction, which is what turns the award into something enforceable.

If you are the one being asked to sign it

Most guidance on arbitration agreements is written for the business handing one over. If you are on the receiving end, you are usually not going to get the clause deleted, but several of its terms are negotiable and a few are worth refusing outright. Read it against this list before you sign.

• Check that it binds both sides. If the other party keeps the right to go to court while you do not, say so and ask for it to be made mutual. This is the most common defect and the easiest to get fixed.
• Work out what you would have to pay. Ask for the provider's fee schedule for the rule set named in clause 5. If you are a consumer or an employee the caps described above apply, and a clause that tries to charge you more than the provider allows is a warning about the rest of the document.
• Look at what happens to the remedies. If the clause bars punitive damages, caps recovery below what the statute allows, or removes attorney's fees a statute would have given you, you are giving up money, not just a courtroom.
• Check the limitation period. A clause cutting your time to bring a claim from several years to six months is a substantive loss dressed up as procedure.
• Confirm you keep the right to file with a government agency. An agreement that appears to stop you complaining to the EEOC, a labour board or a regulator is overreaching, and clause 15 of this template says so expressly.
• Know what you cannot sign away. If the dispute turns out to involve sexual assault or sexual harassment, 9 U.S.C. 402 lets you take it to court whatever the agreement says, and signing this document does not change that.
• If it is presented as non-negotiable and you sign anyway, keep your copy. The terms that make a clause unfair are the same terms that make it vulnerable later, and you cannot argue about a document you no longer have.

When to get a lawyer involved

A general two-party commercial arbitration agreement between businesses of roughly equal bargaining power is well-trodden ground, and this template covers it. Some situations are not that, and the cost of getting them wrong is high enough to justify an hour of advice.

• You are asking employees or consumers to sign. The rules change substantially: provider fee caps apply, several states regulate the terms, and the ground for an unconscionability challenge is much softer.
• The agreement will be signed by many people on identical terms. That is where mass filing exposure lives.
• The other party is outside the United States. Cross-border arbitration is where these clauses earn their keep, under the New York Convention, but the drafting is different and the seat matters far more.
• A regulated relationship is involved, including securities, insurance, healthcare and franchising, each of which has its own overlay.
• You want to narrow the class waiver, alter the remedies available, or shorten the limitation period. Each of those moves toward the ground where clauses fail.

A note on what this page is

This is a general-purpose template and general information, not legal advice. Arbitration law is federal at its base but state law shapes enforceability, and the rules for consumer and employment agreements differ from the commercial default this document is written for. Read it against your own situation, and take advice on anything you are unsure about before you ask someone to sign.