Source: Robin Roth, Senior Contracts Editor, Conferon, Inc.
E-Specs: June 2, 2004

Arbitration is regarded by both meeting professionals and hotels as a cost effective and speedy alternative to litigation. It is private (there is no public record), informal (discovery is limited) and there is more control over choosing a “judge.” It is also less adversarial, which helps to preserve business relationships. The parties can control the process to some extent by adding provisions to the contract clause or modifying some of the rules when a dispute arises. For example, the confidentiality of proprietary information can be requested and issues subject to arbitration can be defined, as can the number of arbitrators and locale. Expedited arbitration procedures are also available.

An arbitration clause in a group facility contract will normally specify that arbitration be conducted using the Commercial Arbitration Rules. These are the rules that are most applicable to group facility contract disputes. This avoids confusion since there are many categories of rules for different types of disputes, such as real estate, wills and trusts, construction industry, elections, employee benefits, patents, health care, and international.

The contract clause will often fix the locale since the Commercial Rules do not specify where the arbitration is to be held and one of the rules does state that the parties may mutually agree on the locale. The locale is not fixed even if language specifies that the arbitration will be conducted or the contract interpreted under the laws of a certain state. The facility will usually select its own location, since it would involve no travel for facility personnel and local businesses may receive preferential treatment in such proceedings. However, it is more convenient for the group if the site is closer to home, for the same reasons, so a fair compromise is to state that the arbitration will be conducted in a neutral site.

(Note: This information is not intended to be "legal advice." A qualified attorney should be consulted to review all legal issues.)