An underlying arbitration agreement is an agreement between parties to resolve disputes outside the court system, through a private process called arbitration. This type of agreement is often found in contracts between businesses, employers, and employees, as well as in consumer contracts.
Arbitration can be a faster and more cost-effective way to resolve disputes than going to court. It is also a private process, meaning that the details of the case are kept confidential. However, many argue that arbitration can also be unfair to consumers and employees, as the arbitrator is often chosen by the business and may have a bias towards their interests.
One of the key features of an underlying arbitration agreement is that it prevents parties from taking their dispute to court. Instead, they are required to go through arbitration. This can limit the legal options available to parties, particularly if they feel that arbitration is not a fair process.
In recent years, there has been controversy around the use of underlying arbitration agreements, particularly in consumer contracts. Many argue that these agreements are used by businesses to take away consumers’ rights to sue them in court, and to avoid potential class-action lawsuits.
The Supreme Court has upheld the use of arbitration agreements in many cases, including in employment contracts and consumer contracts. However, there are still debates about the fairness of these agreements and whether they should be allowed in all situations.
If you are considering entering into a contract that includes an underlying arbitration agreement, it is important to fully understand what this means for your legal options if a dispute arises. You may want to consult with a lawyer to discuss your rights and options.