Limited Partnership Agreement Arbitration Clause: Key Considerations

A Limited Partnership Agreement (LPA) is a legal document outlining the terms and conditions of a partnership between two or more entities, with one of the entities being the limited partner. An arbitration clause in an LPA is a dispute resolution mechanism that allows parties to resolve disputes outside of the courtroom.

An arbitration clause in an LPA should be drafted carefully to ensure that it is enforceable and meets the needs of both parties. Here are some key considerations when drafting a limited partnership agreement arbitration clause.

Scope of Dispute Resolution

The scope of the disputes that can be resolved through arbitration should be clearly defined in the LPA. In some cases, parties may wish to exclude certain types of disputes from the arbitration clause, such as disputes over the validity or enforceability of the LPA or disputes over the rights and obligations of the limited partner.

Selection of Arbitrator

The selection of the arbitrator is an important consideration in the arbitration clause. Parties should agree on a neutral and impartial arbitrator who has the necessary expertise and experience to resolve the dispute. The selection process should also clearly outline the qualifications and credentials required of the arbitrator.

Location of Arbitration

The location of the arbitration should be specified in the arbitration clause. In some cases, parties may wish to have the arbitration take place in a specific jurisdiction, while in other cases parties may agree to have the arbitration take place in a neutral location.

Cost of Arbitration

The cost of the arbitration should be clearly outlined in the arbitration clause. Parties should agree on who will bear the cost of the arbitration, including the cost of the arbitrator, the cost of any expert witnesses, and any other administrative costs associated with the arbitration process.

Confidentiality

The confidentiality of the arbitration process should be considered in the arbitration clause. Parties may wish to include a confidentiality provision that prohibits the disclosure of any information related to the arbitration process, including the award and any settlement agreements reached.

Conclusion

An arbitration clause in an LPA is a useful tool for resolving disputes between parties. However, it is important to carefully consider the scope of dispute resolution, the selection of the arbitrator, the location of the arbitration, the cost of arbitration, and the confidentiality of the arbitration process when drafting the arbitration clause. By doing so, parties can ensure that the arbitration clause is enforceable and meets their needs.