High-Low Contract Arbitration

High-low contract arbitration is a variation on traditional arbitration in which the parties agree to limit the range of possible outcomes before they enter into the arbitration process. This protects the plaintiff (the person complaining) from the fear that he or she will get nothing at all; it also protects the defendant (the person being complained about) from having to pay an exorbitant award. These limits reduce the risks of arbitration and may encourage reluctant parties to enter the process. Another advantage of high-low contract arbitration is that the process of setting the limits for awards initiates a cooperative discussion between the parties before the arbitration takes place. This may pave the way for settlement through negotiation, making arbitration unnecessary.