Colorado Arbitration Clauses: Enforceability Guide
Understanding Arbitration in Colorado
Arbitration clauses require parties to resolve disputes through a private arbitrator rather than in court. Colorado contracts in construction, employment, real estate, and consumer services frequently include these provisions.
Colorado's Legal Framework
Colorado adopted the Colorado Revised Uniform Arbitration Act (C.R.S. Section 13-22-201 et seq.) in 2004, replacing an older statute. This modern law provides detailed guidance on the formation, conduct, and judicial review of arbitration. The Federal Arbitration Act also governs interstate commerce contracts.
Colorado courts favor arbitration. The Colorado Supreme Court in Allen v. Pacheco (2003) held that courts should resolve doubts about the scope of an arbitration clause in favor of arbitration.
Factors That May Undermine Enforcement
- Unconscionability — Colorado courts look at the circumstances of contract formation and the fairness of the terms. In Davis v. M.L.G. Corp. (1986), the Colorado Court of Appeals considered whether a contract of adhesion with oppressive terms could be enforced
- Failure to meet writing requirements — The Revised Uniform Arbitration Act requires arbitration agreements to be evidenced by a record (typically written)
- Waiver — Engaging in litigation before invoking arbitration may waive the right, especially if the other party is prejudiced
- Scope limitations — Colorado courts will not compel arbitration for claims that clearly fall outside the arbitration clause's language
Red Flags in Your Agreement
- The clause waives your right to participate in a class action without clear notice
- Arbitration costs are split equally regardless of the parties' relative financial positions
- The clause references arbitration rules that are no longer current or available
- One party controls the appointment of the arbitrator
When to Consult a Lawyer
Consider reaching out to a Colorado attorney if you are facing a mandatory arbitration clause in a construction contract, employment agreement, or consumer transaction. Colorado's Revised Uniform Arbitration Act provides specific protections that an attorney can help you evaluate.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.