Arbitration is a process in which the disputing parties choose a neutral third person, or arbitrator, who hears both sides of the dispute and then renders a decision. Arbitration, however, is unlike litigation in that the parties choose the arbitrator, the proceedings are conducted in a private manner, and the rules of evidence and procedure are informal. Also, in arbitration, the arbitrators tend to be experts in the issues they are called on to decide. Arbitration has been the widest used alternative dispute resolution process in the business world, and would be especially desirable where the parties do not want to litigate an issue, but do want a binding decision.
Agreement to Arbitrate all Differences Arising out of a Contract Agreement made on the (date), between (Name of Company A), a corporation organized and existing under the laws of the state of ______________, with its principal office located at (street address, city, state, zip code), referred to herein as Company A, and (Name of Company B), a corporation organized and existing under the laws of the state of ______________, with its principal office located at (street address, city, state, zip code), referred to herein as Company B. For and in consideration of the mutual covenants contained in this Agreement, and other good and valuable consideration, the parties agree as follows: I. Matters to be Submitted to Arbitration All disputes and controversies of every kind and nature between the parties to this Agreement arising out of or in connection with that certain Contract (the Contract) between the parties dated (date), a copy of which is attached hereto as Exhibit A, as to the existence, construction, validity, interpretation or meaning, performance, nonperformance, enforcement, operation, breach, continuance, or termination of the Contract shall be submitted to arbitration pursuant to the procedure set forth in this Agreement. II. Procedure A. Either party may demand such arbitration in writing within (number) days after the controversy arises, which demand shall include the name of the arbitrator appointed by the party demanding arbitration, together with a statement of the matter in controversy. B. Within (number) days after such demand, the other party shall chose an arbitrator. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration Association then in force and effect. C. The arbitration costs and expenses of each party shall be borne by that party. D. The arbitration hearing shall be held at (street address, city, state, zip code), on (number) days' notice to the parties. E. The arbitration hearing shall be concluded within (number) days unless otherwise ordered by the arbitrator and the award on the hearing shall be made within (number) days after the close of the submission of evidence. G. An award rendered by a majority of the arbitrators appointed under this Agreement shall be final and binding on all parties to the proceeding during the period of this Agreement, and judgment on such award may be entered by either party in the highest court, state or federal, having jurisdiction. III. Agreement Bars a Lawsuit A. The provisions of this Agreement shall be a complete defense to any suit, action, or proceed
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