Binary Arbitration Clause Samples
The Binary Arbitration clause establishes a dispute resolution process in which an arbitrator must choose between two final offers presented by the parties, rather than crafting a compromise solution. In practice, each party submits their best and final proposal, and the arbitrator selects one in its entirety, without modification. This approach encourages both sides to make reasonable offers, as extreme positions are less likely to be chosen. The core function of this clause is to expedite dispute resolution and promote fair, balanced proposals by discouraging unreasonable demands.
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Binary Arbitration. Where expressly permitted in this Agreement, a party may submit a dispute for resolution by binary arbitration. In such case, the parties shall follow the Expedited Dispute Resolution set forth above, except that the AAA arbitrator shall be required to decide which party’s proposed resolution of the issue is more appropriate in the context of this Agreement. The arbitrator shall not have the option of deciding upon a resolution that reflects a compromise between (or is outside of) the parties’ respective proposed resolutions. For example, if the annual charge for a New Additional Service is to be the subject of binary arbitration, and Capital One has proposed annual charges of one million dollars ($1,000,000) while TSYS has proposed annual charges of one million five hundred thousand dollars ($1,500,000), the AAA arbitrator shall determine which of the two proposals is more appropriate and may not select an amount somewhere between (or outside of) the two proposals. The AAA arbitrator’s decision shall be binding on the parties.