When A Not-So-Basic Arbitration Provision Makes Sense

Home | HS Blog | When A Not-So-Basic Arbitration Provision Makes Sense We’ve always tried to cover key aspects of arbitrations on this blog, and why arbitration may make more sense for your situation, as opposed to having to pursue a public lawsuit in court. But when you need fast, injunctive relief, a prior agreement to arbitrate can potentially cause delay and be problematic. Though a major upside of arbitration is that it is often a faster process overall, arbitration can be much slower than litigation to get started. If you want to file a lawsuit in state or federal court, you draft a complaint and file. In arbitration, you must prepare a demand, appoint an arbitrator or multiple arbitrators, and agree to rules. This can take several weeks. When This Can Be Problematic Sometimes this can pose problems. Many contentious disputes involve requests for “injunctive relief” – this means a party is not (only) asking for money damages, but also an order from the court that restrains a party from doing certain acts. A classic example is if a company is suing one of its ex-employees for spreading its trade secrets to the public. In that case, you need fast relief – something like a temporary restraining order, or a preliminary injunction, or a permanent injunction. A court has inherent authority to order that ex-employee to stop disseminating trade secret information. Not only that, but the court’s authority also is backed by government authority to enforce that order or injunction (as well as having the power to issue sanctions or cite parties for contempt if they don’t obey). Arrbitrators don’t have this same inherent authority. A Carve-Out for Injunctive Relief Claims Makes Sense So, if you intend to include a binding arbitration clause in your business contracts, consider including an exception or carve-out for injunctive relief claims. The goal will be to allow the parties to seek injunctive relief through the courts but resolve all other claims through arbitration. It’s important to have a skilled contract lawyer draft this clause, because the specific language matters. The language needs to make clear that arbitration is not the exclusive remedy in these situations. But, the language also needs to make clear that including a request for injunctive relief does not keep the entire dispute out of arbitration. Note also that the courts in some countries (particularly China) sometimes these carve outs as an excuse not to hear the case at all.0 Check Out Our Practice Areas Share Twitter Facebook LinkedIn E-mail Comment Dan Harris Dan Harris is a founding member of Harris Sliwoski, an international law firm where he mostly represents companies doing business in emerging market countries. Most of his time is spent helping American and European companies navigate foreign countries by working with the international lawyers at his firm in setting up companies overseas (WFOEs, Subsidiaries, Rep Offices and Joint Ventures), drafting international contracts, protecting IP, and overseeing M&A transactions. In addition, Dan writes and speaks extensively on international law, with a focus on protecting foreign businesses in their overseas operations. He is also a prolific and widely-followed blogger, writing as the co-author of the award-winning China Law Blog. Harris Sliwoski Attorney Read more posts [email protected] Read More Business Basics, Litigation and Dispute Resolution Related Posts August 20, 2026 Oregon State Court Civil Discovery: No Interrogatories, No Routine Expert Reports. Litigate Accordingly. August 6, 2026 Buying a Business in the U.S., Part 4: Letters of Intent (LOIs) August 5, 2026 The Lawsuits I See Coming a Mile Away, and the One You're Walking Into Now August 4, 2026 Buying a Business in the U.S., Part 3: Nondisclosure Agreements August 3, 2026 Should Your Business Sue? Seven Questions to Ask Before Filing a Lawsuit July 31, 2026 The Court of Mom: What an Eight-Year-Old's Garage Sale Taught Me About Washington Partnership Law July 27, 2026 United States Litigation for Business Owners: The 101 July 26, 2026 Buying a Business in the U.S., Part 2: How to Price Them July 17, 2026 Buying a Business in the U.S., Part 1: How to Find Them July 1, 2026 Doing Business in the U.S.: Choosing a State of Formation June 18, 2026 Spain Legal Fees, Court Costs, and Litigation Budgets: A Guide for Foreign Companies April 22, 2026 Washington Bench Trial or Jury Trial? How the Choice Can Change Your Entire Case April 21, 2026 Trade Secrets in the AI Economy: Why Businesses Need Stronger Protection Now April 20, 2026 Washington State Arbitration Clauses: When They Help and When They Hurt April 10, 2026 The 8 Biggest Mistakes Foreign Companies Make in U.S. Litigation Leave a comment Cancel reply