Arbitration Clause
(Commercial Lease) (CA)

Summary

This arbitration clause may be used in a commercial lease in California if the lease provides that any dispute arising under it be resolved by binding arbitration instead of through the court system. This clause includes practical guidance and drafting notes. In California, a lease may provide for arbitration of disputes arising under it and the rules pertaining to the selection of arbitrators and the conduct of the hearings are matters almost entirely subject to the mutual desires of the parties. However, if a lease containing an option to purchase or a ground lease coupled with improvements contains an arbitration provision, that provision must conform to statutory requirements for the heading and type size of the provision. The lease must also contain a notice required by Cal. Civ. Proc. Code § 1298. The clause below provides that the parties will submit all controversies relating to the lease to binding arbitration to be conducted in accordance with the rules of the American Arbitration Association and conforms to Cal. Civ. Proc. Code § 1298. Alternatively, the parties may agree that only specific matters designated in the lease will be submitted to arbitration. The capitalized terms and section references used in this clause should be conformed to those used in the relevant commercial lease. For more information on arbitration agreements see Arbitration Laws Overview and Arbitration Clause Drafting. For further guidance on commercial leases see Commercial Real Estate Leasing (CA), Office Lease Agreements, Retail Lease Agreements, and Office Leasing Resource Kit (CA). For commercial lease templates for use in California see Office Lease Agreement (Long Form) (CA), Retail Lease Agreement (Long Form) (CA), and Retail Lease Agreement (Short Form) (Pro-Landlord).