Legal Blog

Arbitration

Arbitration clauses are becoming standard in some agreements. Often arbitration will lead to a cheaper, faster result. Sometimes, it will not. This was the case in Kightly v. Beneteau, a 1999 Superior Court decision.

A shareholders agreement contained a clause in which the parties agreed to submit to arbitration disputes relating to the agreement. There was a disagreement about the valuation of shares and a claim for oppression. One party moved to dismiss an application for oppression arguing that the arbitration clause applied.

     The judge agreed that the valuation dispute was within the scope of the clause and that arbitration would determine its resolution. However, the judge held that oppression was outside the scope of the agreement and that the oppression remedy would continue through the courts. The parties therefore had to deal with two matters at two different times. 

     If one wants everything dealt with through arbitration, one has to carefully draft the arbitration clause.