ARBITRATION CLAUSES BECOMING MORE POPULAR AMONG NJ LLC MEMBERS

By Fredrick P. Niemann, Esq., a NJ LLC Attorney
As a member of a New Jersey LLC, placing an arbitration clause in your NJ Operating agreement can be important to ensuring your disputes will be decided in a fair, cost-effective, and time-efficient manner. These clauses dictate that disputes among LLC members must be settled in arbitration, as opposed to any other forum. The shareholders’ agreement is a binding contract signed by all of the members in your LLC, meaning that all of its provisions must be honored throughout the length of the agreement. Simply put, if any dispute arises among the LLC members that are covered within the arbitration clause, it must be settled in arbitration. The NJ Courts will uphold this provision and will refuse to hear any dispute that is required to be settled via arbitration.

An example of the NJ Courts upholding such a provision was shown in a recent New Jersey Court case. One member of a NJ LLC was suing another, claiming he was an oppressed victim. The defendant not only denied violating the LLC statutes, but also claimed the dispute was required to be settled in arbitration, as opposed to the NJ Courts. The Court agreed with the defendant, finding that since the Operating agreement had an arbitration clause, the Courts would not hear the dispute. The dispute must be decided in arbitration, the Judge said, since the parties were bound by the terms in the Operating agreement.
Contact me personally to discuss your NJ LLC matter. I am easy to talk to, very approachable and can offer you practical, legal ways to handle your concerns. You can reach me toll free at (855) 376-5291 or email me at fniemann@hnlawfirm.com/.

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