Can I require customers to sign contracts with binding arbitration clauses in North Carolina? What are the requirements?

Yes, you can require customers to sign contracts with binding arbitration clauses in North Carolina, but there are certain requirements that must be met.

Requirements for binding arbitration clauses in North Carolina

According to NCGS 22B-3, any provision in a contract entered into in North Carolina that requires the prosecution of any action or the arbitration of any dispute that arises from the contract to be instituted or heard in another state is against public policy and is void and unenforceable. However, this prohibition shall not apply to non-consumer loan transactions or to any action or arbitration of a dispute that is commenced in another state pursuant to a forum selection provision with the consent of all parties to the contract at the time that the dispute arises.

Additionally, NCGS 1-569.7 states that on motion of a person showing an agreement to arbitrate and alleging another person’s refusal to arbitrate pursuant to the agreement, the court shall order the parties to arbitrate unless it finds that there is no enforceable agreement to arbitrate. The court shall not refuse to order arbitration because the claim subject to arbitration lacks merit or because grounds for the claim have not been established.

Conclusion

In summary, you can require customers to sign contracts with binding arbitration clauses in North Carolina, but the clause must comply with the requirements set forth in NCGS 22B-3 and NCGS 1-569.7.

Jurisdiction

North Carolina

• General