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Can I require customers to sign contracts with binding arbitration clauses in Colorado? What are the requirements?

Yes, you can require customers to sign contracts with binding arbitration clauses in Colorado, but there are certain requirements that must be met.

Requirements for binding arbitration clauses in Colorado

According to CORS 24-106-109, any contract entered into by the state that requires the state to indemnify or hold harmless another person, except as otherwise authorized by law, or by which the state agrees to binding arbitration or any other binding extra-judicial dispute resolution process in which the final resolution is not determined by the state, or by which the state agrees to limit liability of another person for bodily injury, death, or damage to tangible property of the state caused by the negligence or willful misconduct of such person or such person’s employees or agents shall be void ab initio. However, this does not apply to contracts with another government.

Therefore, if you are not the state, you can include a binding arbitration clause in your contracts, but it must be enforceable and not against public policy. The Colorado Uniform Arbitration Act, which includes CORS 13-22-207, governs the enforceability of arbitration agreements in Colorado.

Enforceability of arbitration agreements in Colorado

Under CORS 13-22-207, a court may not refuse to order arbitration because the claim subject to arbitration lacks merit or because one or more grounds for the claim have not been established. However, the court may refuse to compel arbitration if there is no enforceable agreement to arbitrate or if the issue sought to be arbitrated is clearly beyond the scope of the arbitration provision.

To ensure the enforceability of your arbitration clause, it is recommended that you:

  • Clearly state the arbitration clause in the contract and make sure the parties understand its implications.
  • Ensure that the arbitration clause is not unconscionable or against public policy.
  • Provide a neutral arbitrator and a fair arbitration process.
  • Include a severability clause in case the arbitration clause is found to be unenforceable.

Additionally, if your contract falls under Section 9 of the Colorado Code of Regulations, it must contain a provision that conflicts will be resolved through binding arbitration or through any other form of ADR agreed to by all parties [2.1].

If you meet these requirements, you can require customers to sign contracts with binding arbitration clauses in Colorado. However, it is recommended that you consult with a legal professional to ensure that your arbitration clause is enforceable and meets all legal requirements. [1.1][3.1][3.2]

Source(s):
Jurisdiction

Colorado