Right to reject arbitration: Overview, definition, and example
What is a "right to reject arbitration"?
The right to reject arbitration is a contract term that lets a person or business choose not to resolve disputes through arbitration. Arbitration is a private process where a neutral third party makes a decision instead of a judge in court. Many contracts assume arbitration is the default, but this clause gives parties the choice to say no and keep the option to go to court.
This right usually has a deadline. You may need to send written notice within a set number of days—often 30 days—to opt out. The contract will explain the exact steps to take.
Why is a "right to reject arbitration" important?
This clause gives people more control over how disputes are handled. Arbitration can be quicker and cheaper than court, but some parties prefer the structure of court proceedings—for example, because court decisions can be appealed, and the process is public.
Including this option in a contract makes things clearer upfront. It helps avoid misunderstandings and shows that the business respects the other party’s right to choose how a dispute is resolved.
Understanding a "right to reject arbitration" through an example
Imagine you’re a business owner signing a deal with a supplier. The contract says all disputes must go to arbitration, but it also includes a section saying you can reject arbitration within 30 days. You read it, decide arbitration is fine, and do nothing. That means disputes will be handled through arbitration. But if you didn’t like that option, you could have rejected it and kept the right to go to court instead.
In a second example, an employee signs a job offer that includes mandatory arbitration for workplace issues. However, the contract says the employee can opt out of arbitration within 30 days. If they’re uncomfortable with arbitration, they can send written notice and choose to keep the right to go to court. If they don’t opt out, arbitration becomes the default way to resolve future disputes.
Example of a "right to reject arbitration" clause
Here’s an example of what a "right to reject arbitration" clause might look like in a contract:
“The Parties acknowledge that, by entering into this Agreement, they are agreeing to resolve any disputes through binding arbitration. However, the Parties have the right to reject arbitration by notifying the other Party in writing within 30 days of executing this Agreement. If arbitration is rejected, the Parties may pursue resolution of the dispute in a court of law.”
Conclusion
The right to reject arbitration gives people the ability to choose a different path for resolving disputes. It helps protect their options and ensures they understand what they’re agreeing to. Whether you stick with arbitration or opt for court, knowing your rights makes it easier to make the right call.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.