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

Requirements for Binding Arbitration Clauses in Pennsylvania

To require customers to sign contracts with binding arbitration clauses in Pennsylvania, certain requirements must be met. The parties must agree to submit any disputes to arbitration, and the agreement must be in writing [42 PACS 7321.5(a)]. Before a controversy arises, a party to the agreement may not waive or agree to vary the effect of certain requirements of the subchapter, including the validity of the agreement to arbitrate [42 PACS 7321.5(b)(ii)]. The right to notice of the initiation of an arbitration proceeding cannot be unreasonably restricted [42 PACS 7321.5(b)(ii)]. If the arbitration agreement is applicable to a consumer transaction, the hearing must be held at a location reasonably convenient to the consumer [42 PACS 7321.16(f)]. The arbitrator must conduct the arbitration in a manner appropriate for a fair and expeditious disposition of the proceeding [42 PACS 7321.16(a)]. At a hearing, a party to the arbitration proceeding has the right to be heard, to present evidence material to the controversy, and to cross-examine witnesses appearing at the hearing [42 PACS 7321.16(d)]. If an arbitrator ceases or is unable to act during the arbitration proceeding, a replacement arbitrator must be appointed to continue the proceeding and to resolve the controversy [42 PACS 7321.16(e)]. A plaintiff seeking to compel arbitration of a claim shall commence a civil action against the defendant. The complaint shall include an allegation that the claims raised in the complaint are subject to an agreement to submit these claims to arbitration [231 PACO Section 1329(a)(2)]. Any party may file a motion to confirm an arbitration award entered following a court order or docket entry staying proceedings pending arbitration. The motion to confirm shall be filed as an ancillary proceeding to the pending civil action [231 PACO Section 1329(e)(1)]. Any party may file as an original proceeding a motion to confirm an arbitration award if the arbitration award was entered pursuant to Rule 1327(1) [231 PACO Section 1328(a)].

Initiation of Arbitration

A person initiates an arbitration proceeding by giving notice in a record to the other parties to the agreement to arbitrate in the agreed manner between the parties or, in the absence of agreement, by certified or registered mail, return receipt requested and obtained, or by service as authorized for the commencement of a civil action. The notice must describe the nature of the controversy and the remedy sought. Unless a person objects for lack or insufficiency of notice under section 7321.16 (relating to arbitration process) not later than at the beginning of the arbitration hearing, the person by appearing at the hearing waives any objection to lack of or insufficiency of notice [42 PACS 7321.10].

Court Proceedings to Compel or Stay Arbitration

On application to a court to compel arbitration made by a party showing an agreement described in section 7303 (relating to validity of agreement to arbitrate) and a showing that an opposing party refused to arbitrate, the court shall order the parties to proceed with arbitration. If the opposing party denies the existence of an agreement to arbitrate, the court shall proceed summarily to determine the issue so raised and shall order the parties to proceed with arbitration if it finds for the moving party. Otherwise, the application shall be denied. On application of a party to a court to stay an arbitration proceeding threatened or commenced the court may stay an arbitration on a showing that there is no agreement to arbitrate. When in substantial and bona fide dispute, such an issue shall be forthwith and summarily tried and determined and a stay of the arbitration proceedings shall be ordered if the court finds for the moving party. If the court finds for the opposing party, the court shall order the parties to proceed with arbitration. If a controversy alleged to be or not to be referable to arbitration under the agreement is also involved in an action or proceeding pending in a court having jurisdiction to hear applications to compel or stay arbitration, the application shall be made to that court. Otherwise, subject to section 7319 (relating to venue of court proceedings), the application may be made in any court of competent jurisdiction. An action or proceeding, allegedly involving an issue subject to arbitration, shall be stayed if a court order to proceed with arbitration has been made or an application for such an order has been made under this section. If the issue allegedly subject to arbitration is severable, the stay of the court action or proceeding may be made with respect to the severable issue only. If the application for an order to proceed with arbitration is made in such action or proceeding and is granted, the court order to proceed with arbitration shall include a stay of the action or proceeding [42 PACS 7304][42 PACS 7321.8].

Conclusion

To require customers to sign contracts with binding arbitration clauses in Pennsylvania, the parties must agree to submit any disputes to arbitration, and the agreement must be in writing. Certain requirements must be met, including notice of arbitration, location of arbitration hearing, fair and expeditious disposition, right to be heard, replacement arbitrator, and motions to compel and confirm arbitration awards. A person initiates an arbitration proceeding by giving notice in a record to the other parties to the agreement to arbitrate in the agreed manner between the parties or, in the absence of agreement, by certified or registered mail, return receipt requested and obtained, or by service as authorized for the commencement of a civil action. On application to a court to compel arbitration made by a party showing an agreement described in section 7303 (relating to validity of agreement to arbitrate) and a showing that an opposing party refused to arbitrate, the court shall order the parties to proceed with arbitration. If the opposing party denies the existence of an agreement to arbitrate, the court shall proceed summarily to determine the issue so raised and shall order the parties to proceed with arbitration if it finds for the moving party. Otherwise, the application shall be denied. On application of a party to a court to stay an arbitration proceeding threatened or commenced the court may stay an arbitration on a showing that there is no agreement to arbitrate. When in substantial and bona fide dispute, such an issue shall be forthwith and summarily tried and determined and a stay of the arbitration proceedings shall be ordered if the court finds for the moving party. If the court finds for the opposing party, the court shall order the parties to proceed with arbitration [42 PACS 7321.5(a)][42 PACS 7321.5(b)(ii)][42 PACS 7321.16(f)][42 PACS 7321.16(a)][42 PACS 7321.16(d)][42 PACS 7321.16(e)][231 PACO Section 1329(a)(2)][231 PACO Section 1329(e)(1)][231 PACO Section 1328(a)][42 PACS 7321.10][42 PACS 7304][42 PACS 7321.8].

Jurisdiction

Pennsylvania

• General