Many contracts have an Arbitration Clause that require that disputes be settled by arbitration and not be taken to civil court. The advantage to having an Arbitration Clause is that it can be less costly to arbitrate, the parties can control the issues and the resolution of the dispute and the case can generally be resolved quicker. The disadvantage to an Arbitration Clause is that the decision of the arbitrator can be appealed and the arbitrator does not have the ability to enforced the ruling nor can the arbitrator award anything other than money. If you want some kind of order that limits the conduct of the other party (e.g., do not contact certain customers), the arbitrator does not have the power to order this.
In general, the courts encourage alternate dispute resolution through arbitration or mediation and tend to enforce an Arbitration Clause in contracts. Arizona has changed direction and applied a different standard to cases involving an Arbitration Clause.
The Broemmer case from 1992 found an Arbitration Clause to be unenforceable because it fell outside her reasonable expectations. Ms. Broemmer was a pregnant 21 year old high school graduate seeking an abortion. She was presented three agreements to sign including an agreement with an Arbitration Clause to arbitrate disputes in front of a panel of physicians. The language in the Arbitration Clause was in bold capital letters and prominent. During the procedure the physician punctured her uterus leading to a civil suit for malpractice.
The Supreme Court found Ms. Broemmer was under emotional distress, unsure of the meaning of an Arbitration Clause, inexperienced and the provider failed to explain to her that the case would be heard by similar doctors. The Court found the waiver of her right to a jury trial was not knowingly voluntarily or intelligently waived and that the contract with the Arbitration Clause was one of adhesion. An adhesion contract is one offered on a take it or leave it basis to a consumer who has no realistic bargaining strength and cannot obtain the services elsewhere without consenting to the identical contract terms.
In Arizona this has caused an erosion of the validity of an Arbitration Clause in contracts. While the Court emphasized the case was only based on its unique facts, it is a unique interpretation of the validity of the Arbitration Clause. In the majority of cases, particularly in cases of sophisticated business persons, an Arbitration Clause is enforced and encouraged by the Courts.