Colorado Arbitration Reform Hits a Veto

Posted September 03, 2026 in Arbitration

Colorado businesses spent much of 2026 watching a bill that would have reshaped how arbitration works across the state. It passed both chambers, then stalled on the governor’s desk. For any company that relies on arbitration language in its contracts, the outcome is worth understanding.

What HB26-1236 Would Have Done

House Bill 26-1236, branded as arbitration reform, aimed squarely at consumer and employment agreements. Among other things, it would have limited class action waivers, voided arbitration fees that far exceeded normal court filing costs, and disqualified arbitrators who showed biased patterns. The measure also carried a steep penalty. A business that failed to pay an award within 120 days could face damages equal to double the award. On top of that, the bill would have lifted Colorado’s long-standing ban on punitive damages in arbitration.

The Veto Changed Everything

Governor Polis rejected the bill in June 2026. He wrote that making arbitration harder to use would push more disputes into court and raise costs for consumers, workers, and businesses. State news outlets covered the decision alongside two other vetoes that week.

So the reforms are not law. Arbitration in Colorado still runs on existing statute and, more to the point, on the exact terms written into each contract. The sponsors may bring a similar bill in a future session, so it’s worth watching.

Why the Contract Still Decides

Arbitration is never automatic. Whether a dispute heads to arbitration, mediation, or court depends on what the parties agreed to when they signed. Construction agreements in particular tend to tuck these terms deep into the boilerplate, and that language governs how a payment fight or defect claim gets resolved. For growth-stage companies, multi-owner partnerships, and closely held corporations, the clause deserves a careful read long before any conflict starts.

Here are a few steps worth taking now:

• Review the dispute-resolution clause in every active contract
• Confirm whether it requires arbitration, allows mediation, or leaves court open
• Flag any fee-shifting or venue terms that could raise your costs
• Refresh your templates as the business grows or adds partners

We often favor mediation first. It tends to resolve matters faster and at lower cost than either arbitration or a lawsuit. Where a contract calls for arbitration, our Castle Rock, CO arbitration lawyer prepares for it. When the client’s interests are best served in court, we litigate. 

Building Contracts That Prevent Disputes

Our attorneys serving the Castle Rock area help developers, investors, and emerging enterprises write agreements that reduce risk before problems surface. Working with a Castle Rock arbitration lawyer early, rather than after a claim lands, usually costs far less than any single fight later.

If you want your existing agreements reviewed, an attorney at Volpe Law LLC can walk through your options.

Volpe Law LLC handles construction and business disputes throughout Colorado, from contract drafting to litigation when needed. Contact us to talk through your situation.