Jihee Ahn
We’ve written a lot about hashish arbitrations earlier than, and why these proceedings might make extra sense on your state of affairs (see hyperlinks on the backside of this submit!). However whenever you want quick, injunctive reduction, a previous settlement to arbitrate can doubtlessly be disastrous.
Arbitration is far slower than different litigation to get began — despite the fact that arbitration is often considered extremely environment friendly and having an general shorter timeline. If you wish to file a lawsuit in state or federal courtroom, you draft a grievance and file. In arbitration although, it’s a must to put together a requirement, appoint an arbitrator or a number of arbitrators, and conform to guidelines. This could take a number of weeks.
The issue
Typically this isn’t a problem, however typically it’s. Many hashish litigation circumstances can contain requests for “injunctive reduction” – this implies, a celebration just isn’t (solely) asking for cash damages, but in addition an order from the courtroom that restrains a celebration from doing sure acts.
A basic instance is that if a hashish firm is suing considered one of its ex-employees for spreading its commerce secrets and techniques to the general public. In that case, you want quick reduction – one thing like a brief restraining order, or a preliminary injunction, or a everlasting injunction. A courtroom has inherent authority to order that ex-employee to cease disseminating commerce secret info. Not solely that, however the courtroom’s authority is also backed by authorities authority to implement that order or injunction (in addition to energy to concern sanctions or cite events for contempt in the event that they don’t obey). Sadly, arbitrators don’t have the inherent authority.
The answer
So, should you intend to incorporate a binding arbitration clause in your hashish enterprise contract, contemplate together with an exception or carve-out for injunctive reduction claims. The purpose shall be to permit the events to hunt injunctive reduction by means of the courts however resolve all different claims by means of arbitration.
It’s vital to have a talented contract lawyer draft this clause, as a result of the precise language issues. The language must clarify that arbitration just isn’t the unique treatment in these conditions. However, the language additionally must clarify that together with a request for injunctive reduction doesn’t hold all the dispute out of arbitration.
For extra posts about hashish arbitration, please see: