A caller wonders about the enforceability of an arbitration agreement, especially one that stipulates which state’s law will apply. Attorney Matt Catchick explains that this might be enforceable, but an attorney really should review the document to make sure.

Male Speaker 1: Nick, you’re on the Law Show, what can we do for you?

Male Speaker 2: Regarding the contract that I have and one of the clauses in the contract refers to arbitration. And the company that I had the contract with is out of state and we’ve been kind of going back and forth as far as some of the terms regarding commission and my question is there is another part of the contract that says its according to the state law that they are incorporated in. And my question is do I have to file for arbitration here in Michigan or can I file in Michigan or does it have to be in that particular state where they are incorporated?

Male Speaker 1: Yeah, it’s a great question. You’d had to look at the language of the statute. It is common for contracts to have choice of laws provisions meaning they say something like the laws of the State of Michigan will govern this agreement. And so what you’re going to have to do is you’re going to have to get a lawyer that is licensed to practice in the state that the choice of law provision and that contract to review it and advice you accordingly because if its not Michigan I’m not licensed to practice in any states other than Michigan in federal court, so I can’t tell you what the ramifications would be. So lets say hypothetically the contract says the laws of the State of Illinois will control this agreement or shall control this agreement, then get a Illinois lawyer to take a look at that because I can tell you in these current times Alternative Dispute Resolution, ADR as it is known as is really popular because it’s a lot cheaper than going to court. However, lots of times that arbitration can help the big huge company rather than the little employees you got to be very careful because binding arbitration clauses or agreement to arbitrate clauses are becoming increasingly and popular in contracts and lots of them have opt out provisions. So get someone who is licensed to practice in the state of the choice of law provision to that contract to advice you, okay.

Male Speaker 2: Okay.

Male Speaker 1: Yeah, if you want to get a referral call us Monday at 1866-66 lawyer and we’d be happy to assist you with that process if you need us to refer a lawyer in another state, okay Nick.

Male Speaker 2: That would be great. I’d really appreciate that.