A partnership agreement sets forth the terms and conditions that govern the relationship
between business partners and their obligations to the partnership. Without a written
partnership agreement, state law may determine the default rules as to the rights of
partners and how partnership assets and liabilities will be distributed. Depending on the
goals and purposes of the partnership, various provisions can be included in the
agreement detailing the rules that will govern the relationship between the partners and
what shall occur if specific contingencies arise. This partnership agreement article on
Binding Arbitration may be inserted into a partnership agreement and can be modified
depending on the partners’ specific needs.
PARTNERSHIP AGREEMENT ARTICLE
RE: ARBITRATION CLAUSE (Binding and Non-Binding followed by Litigation)
1. Binding Arbitration
The Parties agree that any dispute shall be resolved by binding confidential arbitration, before a single
arbitrator, as set forth below.
If the Parties cannot agree upon an arbitrator within thirty (30) calendar days of the giving of notice of
a demand for arbitration, each Partner shall submit the names of three arbitrators. All arbitrators shall
be (i) members of a reputable mediation service (such as, for example only, JAMS/Endispute,
Judicate West, or American Arbitration Association), (ii) persons actively involved in arbitrating
private cases, and (iii) residents of the area where the arbitration is to occur, so as to minimize travel
related expenses related to the arbitrator. If the Parties cannot agree on an arbitrator from that list, then
the Parties shall alternately strike four names from the list, with the first Partner and each succeeding
Partner to strike being determined by lot. After each Partner has used two strikes, the arbitrator shall
be determined by entering the remaining names on the list in a drawing, and randomly selecting from
those names, with the Partner selecting being the last Partner to strike a name.
The arbitration shall be conducted in accordance with the rules and procedures of the organization at
the time of the arbitration, except as set forth herein.
If there is arbitration there shall be full rights of discovery and ability to subpoena and call witnesses
pursuant to the law and court rules of the jurisdiction or venue where the arbitration is being held,
even if the rules of the arbitration organization do not require or allow this.
Unless agreed to otherwise, the Partner who initially asserts a claim or claims for arbitration will
advance ___% (___ percent) of all necessary costs and expenses of arbitration (excluding the legal
fees and costs of a Partner) and the other Partner or Partners will be responsible for ____% (___
percent), unless the arbitrator decides otherwise upon motion by a Partner, including by taking into
consideration whether cross-claims are asserted and the proportionate value of those cross claims as
well as the likely percentage of time to be devoted in the arbitration to such cross-claims, and the
financial ability and proportionate resources of the Parties, which may be submitted in private. The
ultimate cost of the arbitration, including legal fees and costs, shall be borne by the losing Partner or in
such proportion as the arbitrator shall decide based upon law and facts, including for motions brought
and lost if the arbitrator determines that there was not a good faith basis for bringing or opposing some
portion or all of the motion, which arbitration and attorneys’ fees and costs may be sought, awarded,
payable, and confirmable by a court of competent jurisdiction following a ruling on the motion and
prior to the conclusion of the arbitration.
It is agreed that the decision, award or judgment of the arbitrator(s) in the arbitration may be
confirmed by a court of competent jurisdiction and thereafter enforced or appealed in the same
manner as if it had been rendered by a judge or jury in a judicial proceeding. The Parties agree to use
all reasonable efforts to keep all matters relating to any mediation and arbitration hereunder
© Copyright 2013 Docstoc Inc. registered document proprietary, copy not 2
In the event a mediation settlement agreement is entered into or an arbitration decision, award or
judgment is obtained, or settlement consent judgment agreed to, whether entered, filed or confirmed in
court or not, the Partner against which there may be obligation or against which the decision, award or
judgment has been made agrees to pay all attorneys' fees and costs incurred in the enforcement of any
such agreement, decision, award or judgment. This provision is separate and apart from any other
provision for attorneys' fees and costs incurred to enforce the agreement, decision, award or judgment.
This provision does not merge with any arbitration or judgment and may be used either (1) as a basis
for obtaining attorneys' fees and costs in the same matter in which an award or judgment was obtained
or (2) as a basis for obtaining attorneys' fees and costs in a separate action.
It is further agreed that any mediation settlement shall be reduced to a consent judgment, which may
be confirmed by a court of competent jurisdiction and thereafter enforced (but not appealed) in the
same manner as if the judgment had been rendered in a judicial proceeding. Again, however, the
Parties agree to use all reasonable efforts to keep all matters relating to any mediation and arbitration
The arbitrator shall set forth in writing evidentiary rulings, findings of fact and conclusions of law, and
shall render all awards based thereon. Following application by either Partner to a court of competent
jurisdiction for an order confirming, modifying, or vacating the award, the court shall have the duty,
right and power to review: (a) whether the findings of fact rendered by the arbitrator(s) are supported
by admissible evidence, and by the proper burden of proof; and, (b) whether, as a matter of law based
on such findings of fact, the award should be confirmed, modified or vacated. Upon such
determination, judgment shall be entered in favor of either Partner consistent therewith. The Court
shall grant attorneys’ fees and costs to the Partner that prevails on any action, proceeding, motion,
appeal, or the like, to oppose confirmation, or to modify or vacate an award.
Notwithstanding the foregoing either Partner may seek equitable, preliminary, or permanent injunctive
relief from any court of competent jurisdiction, which rights and remedies shall be cumulative and in
addition to any other rights or remedies at law or in equity to which either Partner may be entitled.
Each Partner will bear their own fees and costs, including those of attorneys or experts, in relation to
any mediation, arbitration, or litigation, except as specifically set forth herein.
The Parties further agree that service of process may be effectuated upon them by first class mail,
postage pre-paid, cert