Landowners must negotiate solar leases to address the venue and jurisdiction of any Future Disputes. It is The Clark Law Firms’ opinion that generally the landowner should avoid Arbitration, and certainly mediation, as part of any Solar Lease Agreement. Solar lease agreements should also address how attorney fees and litigation costs and expenses will be paid in the event of any future disputes.
Arbitration
Arbitration is often “sold” to landowners as an efficient vehicle to litigate disputes as there is no appeal process. However, Arbitrations can be, and often are, extremely expensive and do not set legal precedent for future cases. When an Arbitration provision requires seating three arbitrators, the landowner will typically pay for their own arbitrator and half the cost of the third arbitrator. The solar company will pay for their own arbitrator and split the cost of the third arbitrator. These arbitrator fees can be extremely high. Sometimes ranging into several thousands of dollars per day per arbitrator. Due to this high expense, Arbitration often precludes a landowner to bring a viable claim against a solar company due to the expense of the Arbitration process.
For example, if you feel you are entitled to $25,000 resulting from a breach of your contract, it is unlikely that you would pursue the matter through Arbitration if the arbitrator fees, costs, and expenses, as well as attorney fees, are anticipated to meet or exceed the amount you stand to gain. In sum, Arbitration fees, filing fees, and attorney fees will often preclude a landowner from bringing a legitimate claim due to expenses and the uncertainty of success.
Also, Arbitration decisions are not binding precedent for future cases and they are generally confidential. A solar company may be more inclined to dispute your case in Arbitration knowing that the landowner will face substantial personal expense and that any decision against the company cannot be used against them by other landowners. Also, landowners cannot bring class-action lawsuits against companies through the Arbitration process. Taking away the power of a class-action lawsuit eliminates a company’s fear of losing a suit that could benefit an entire class of its lessors/landowners. The Clark Law Firm is generally against Arbitration provisions and seeks to eliminate them wherever possible.
Mediation
Mediation is like Arbitration except that Mediation is non-binding. Mediation involves one or more mediators who will hear each side and issue “recommendations”. A mediator’s recommendation is non-binding. Neither the company nor the landowner must accept the mediator’s recommendation. Mediation results in the landowner committing themselves to extensive legal expenses as well as Mediation costs, including the cost of the mediator or mediators. Again, landowners who have mandatory Mediation provisions in their agreements are far less likely to bring a Mediation claim against the company given its non-binding nature. A Solar Lease Agreement requiring mediation before arbitration having two substantial financial hurdles to overcome in order to bring any claim against the company. It is The Clark Law Firm’s opinion that mandatory Mediation should be avoided at all costs in any Solar Lease Agreement. Remember, the landowner and company can always voluntarily engage in Mediation in the future, and the landowner should not bind themselves to Mediation in the Solar Lease Agreement.
