Q. What is a predispute arbitration clause?

A. An arbitration clause is a commonly used clause in a contract that requires the parties to resolve their disputes through an arbitration process. Although such a clause may or may not specify that arbitration occur within a specific jurisdiction, it always binds the parties to a type of resolution outside of the courts, and is therefore considered a kind of forum selection clause. Virtually every securities brokerage firm will provide you with a standard new account form with a clause that requires you to pursue any grievance through arbitration proceedings instead of the court system.