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The clause that takes your dispute out of court

A mandatory arbitration clause usually moves a dispute out of court, with no jury and no class action. This guide reads one from a real agreement filed with the SEC.

What it costs

Spend $10,000 on a $3,000 claim, and you are $7,000 behind unless fees are awarded.

Assumes $10,000 for your lawyer and travel and no fees recovered. This clause lets the arbitrator award fees to the winner. An example, not a figure from the agreement. An illustration, built on the assumptions stated here.

The clause, from a real filing

Arbitration Procedures.

The Company and I agree that, except as provided in this Agreement, any arbitration shall be in accordance with and under the auspices and rules of the Judicial Arbitration and Mediation Services, Inc. (“JAMS”) for the resolution of employment disputes. … The arbitrator may not consolidate more than one person’s claims, and may not otherwise preside over any form of class proceeding. … I agree that any arbitration under this Agreement shall be conducted in Utah County, Utah. The arbitrator’s decision regarding the claims shall be final and binding upon the parties and shall be enforceable in any court having jurisdiction thereof.
Employment Offer Letter with Mutual Agreement to Arbitrate Claims, Exhibit 10.2, CIK 1816708, Form 8-K, filed with the SEC on April 6, 2026. Read the original on SEC.gov
  • High risk

    No jury, no class action, one named county

    For most claims, you give up a jury and a class action, and the hearing is in one named county. The agreement leaves agency charges open, but bars court action on them. The company pays the arbitrator on claims about legal rights that cannot be waived, while other claims split that cost. Each side starts out paying its own lawyer. Federal law lets a sexual harassment or sexual assault claim go to court if you choose.

The change to ask for

Before: I agree that any arbitration under this Agreement shall be conducted in Utah County, Utah. The arbitrator’s decision regarding the claims shall be final and binding upon the parties and shall be enforceable in any court having jurisdiction thereof.

After: I agree that any arbitration under this Agreement shall be conducted in the county where I live or work, or by video at my choice. The Company shall pay all fees charged by JAMS or the arbitrator. Either party may bring an individual claim in small claims court instead. The arbitrator’s decision regarding the claims shall be final and binding upon the parties and shall be enforceable in any court having jurisdiction thereof.

Suggested language to discuss, not legal advice. The venue, the fee ask, and the small claims carve-out are examples.

Before you sign: the arbitration clause

  1. Find the clause. It may sit under Arbitration, Dispute Resolution, or Governing Law.
  2. Check what it covers: every claim, or only some, and whether small claims court and agency charges stay open.
  3. Check who picks the arbitrator and the rules, such as JAMS or the American Arbitration Association.
  4. Check who pays the arbitrator’s fees and the filing fee, and whether the loser pays the other side’s lawyer.
  5. Check where the hearing is held, and whether you could attend by video.
  6. Ask for a hearing near you, the other side to pay all the arbitration fees, and small claims court kept open.
Open the one-page checklist to print
Transcript
  1. 0:00This clause moves most disputes out of court.
  2. 0:03It comes from an employment arbitration agreement filed with the SEC.
  3. 0:08Most claims go to an arbitrator in one named county, and the decision is final.
  4. 0:13For most claims, you give up a jury and must bring them alone.
  5. 0:16A $3,000 claim can cost more than that to bring.
  6. 0:21If you lose, you may owe the other side’s fees, unless the law bars it.
  7. 0:25Check three things. Who picks the arbitrator? Who pays the fees? Where is it heard?
  8. 0:31Ask for a hearing near you, and for the other side to pay all the arbitration fees.
  9. 0:36If they say no, ask at least for a small claims carve-out.
  10. 0:39A BeforeJD read marks a clause like this, explains it in plain English, and writes the change to ask for.
  11. 0:46It also drafts the email that asks for it.
  12. 0:50Check your contract for this clause.
  13. 0:53Your first read is free.

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Check your contract for this clause.

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BeforeJD is not a law firm. This is informational only, not legal advice.