The authors are partners in the New York City offices of Jones Day. The views expressed are solely those of the authors, and should not be attributed to the author’s firm or its clients. Sean Murphy, an associate at Jones Day, assisted in the preparation of this article.
Many commercial construction projects are intended for lease. Commercial landlords and tenants can benefit from prompt resolution of disputes through arbitration. This article identifies the lease provisions most likely to give rise to disputes suitable for arbitration and discusses how to tailor the arbitration provision to them.
Why provide for arbitration in commercial leases? Proponents of arbitration cite its efficiency, privacy, cost savings, control, flexibility and less adversarial approach as virtues. They also point to the relative ease with which victors may enforce arbitration awards and the limited right to review such awards.1 Landlords and tenants need an effective way to manage the risks associated with disputes. Arbitration can provide what landlords and tenants need at less cost and time than litigation, particularly for smaller disputes that arise during the lease term.