Mandatory Binding Arbitration

Arbitration clauses have become increasingly common in many types of agreements, such as employment contracts, health insurance and the sale and lease of automobiles. In fact, many doctors, hospitals and other healthcare providers will not accept new patients unless they agree to submit any claims of medical malpractice to mandatory binding arbitration.

Arbitration Basics

Arbitration is a form of alternative dispute resolution employed instead of a court trial. Although it is an adversarial evidentiary process whereby a dispute is submitted for decision to either one arbitrator or a panel of three, arbitration is less formal than a trial, and it is intended to be less costly and provide a quicker resolution.

“Mandatory” and “Binding”

If the terms of the agreement provide for mandatory arbitration, the parties must seek arbitration before resorting to litigation; if the contract language indicates binding arbitration, the arbitrator(s)’ decision is final and neither party may seek relief in court.


As with most matters in law, there are exceptions to mandatory binding arbitration. For example, under California law, the enforceability an of arbitration clause can be challenged on the grounds that is unconscionable. Additionally, certain mandatory binding arbitration clauses are covered under the Federal Arbitration Act, which specifies grounds to challenge an arbitration decision.

Contact an Orange County Business Litigation Lawyer for Legal Advice

Arbitration is often as complicated as litigation, and important rights hang in the balance. For an evaluation of your case, call Daily Aljian, LLP, an Orange County business litigation attorney, at 949-861-2524.