Arbitration

In order to maintain a positive and supportive environment within sororities, as well as manage the risk of escalation during disagreements, it is essential to establish effective mechanisms for dispute resolution among sorority members.

As the cost and administrative burden of litigation continues to grow, MJ Sorority supports the inclusion of binding arbitration clauses in membership agreements as a fair and efficient form of dispute resolution. Binding arbitration clauses are standard practice in many industries today, and if executed thoughtfully, can benefit both the organization and its members.

What is arbitration?

Arbitration is a formal method of dispute resolution that provides an alternative to traditional litigation. Overseen by a neutral arbitrator or arbitrators, parties to a dispute present evidence, make arguments, and are bound by the arbitrator’s decision, much like the formal litigation process. However, there are some important distinctions between arbitration and litigation. Arbitration is a private process and typically much more efficient. Additionally, parties to an arbitration choose the arbitrator presiding together, or in the case of a tribunal, each choose an arbitrator, who then in conjunction with one another, choose the third arbitrator on the panel.

How do arbitration clauses become relevant during a dispute?

Typically, arbitration clauses are leaned upon when one of the parties to a dispute changes its mind about using the arbitration process and wants to “have their day in court.” The court then looks to the original agreement to determine the validity of the arbitration clause and if the language of the arbitration agreement passes muster, the court will hold the parties to their agreement and send the dispute to a neutral, third-party arbitrator.

This is why arbitration clauses should be presented as part of an organization’s membership agreement, ensuring that there is a clear written record from the moment a member joins the organization.

What are the key components of an arbitration clause?

To ensure that arbitration clauses included in membership agreements are enforceable, a few key components should be present:

Specific language—The agreement should clearly outline what types of disputes will go to arbitration. The agreement must clearly state that signing the agreement means that both parties waive their right to recourse in court.
Meaningful choice—Courts want to ensure that all parties to an agreement have equal bargaining power. New members should be given meaningful opportunity to study and ask questions about their membership agreement, including the arbitration clause.
Notice/Acceptance—When implementing a dispute resolution program using arbitration, the contracting sorority needs to have a written record of putting their existing members on notice of the program, if applicable. Where possible, a sorority should collect assent to an arbitration program from existing members via signature. Inclusion of an arbitration clause in the membership agreement for new members satisfies these concerns.
Confidentiality—While arbitration takes place behind closed-doors, meaning that the proceedings are not open to the public, there must be an additional clear agreement to maintain confidentiality. It’s recommended that membership related offenses be handled internally to maintain the privacy of members and foster trust and openness in the dispute resolution process. Including confidentiality language in the arbitration agreement will bind parties to the to keep the process confidential.

Keeping these components in mind while drafting arbitration clauses will bolster their validity and ensure all parties have clear expectations of the arbitration process.

What are the challenges of binding arbitration? What concerns does MJ Sorority have with arbitration clauses?

When arbitration clauses first came into fashion in the early ‘00s, courts were mostly deferential to such clauses and did not entertain challenges to their validity. In the last 15 years, courts have become much more wary of arbitration clauses, in some cases, finding them unconscionable, meaning that they are held invalid.

Claims of unconscionability, while hard to win, are important to consider when drafting and distributing membership agreements with arbitration clauses.

What is the benefit of arbitration over mediation or traditional litigation?

The arbitration process is private, helping parties avoid potentially lengthy, public, and expensive litigation. Furthermore, unlike in mediation, the arbitration process authorizes a neutral arbitrator to make a decision about the dispute, including the arbitration award, which is then only confirmed by a court. Typically, the arbitration agreement will include language that waives the parties’ right to appeal on substantive grounds in a court of law, limiting costs for all involved.

What is MJ Sorority’s Opinion on arbitration for dispute resolution?

While organizations should examine arbitration laws in each state of chapter operation, binding arbitration clauses are generally recommended to be part of membership agreements. If used, these clauses should be carefully worded to be specific and reasonable to both the contracting member and the organization. Organizations must demonstrate that there is equal bargaining power between the contracting parties and that the language used is specific and unambiguous. Organizations should also put existing members that have not signed an updated membership agreement on notice of an arbitration program’s implementation and collect assent via signature where possible.

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