Take One Step Forward If You Have Never Agreed to Binding Arbitration…. Not So Fast!
If you’ve ever found yourself in a dispute with another party, business, or employer, you probably relied on the fact that you could be heard in a Court of Law if you had an unresolved legal issue. While not perhaps the most desirable outcome, you may have taken some solace in that the Constitution ensures that you cannot be deprived of legally protected rights without recourse in the Judicial System. Unfortunately your reliance and solace were very likely misplaced.
If you think that you would never be so careless as to sign away and waive your right to sue in the event of being deprived of your rights, you may wish to think again. Mandatory Binding Arbitration clauses have become commonplace in many contracts, and the courts have upheld legality of these clauses even while it is widely believed that they violate the spirit of many existing laws. In fact, they have become so common, it’s unlikely that you haven’t already become a party legally bound to such a clause. Cell phone contract? Mandatory Binding Arbitration. Credit cards? Mandatory Binding Arbitration. Bought a car? Mandatory Binding Arbitration. Work for an employer? Mandatory Binding Arbitration. It’s no mistake that these clauses seem to most often apply to those instances where you may most likely have a dispute, especially in cases where you may think there are laws that protect you.
What’s wrong with arbitration? Inherently, nothing! As a State Registered Neutral in Civil Mediation, I both practice and advocate Alternative Dispute Resolution (ADR) as a way to solve problems outside litigation. ADR practices, including arbitration, have many advantages, not the least of which are the savings of time and money. ADR should ensure fairness of process and outcome both by the neutrality of the arbitrator or mediator and by the voluntary participation of the parties. This ensures a level playing field where all abide by the system fairly, else others would be compelled to leave the process. It is the “Mandatory” aspect which both compromises the neutrality, as the arbiter is “hired” by the defending party, as well as the assurance of fairness by being able to discontinue the process should it prove to be flawed or unfair. In the end, many laws that are in place to protect you may be left to the interpretation of an arbiter who earns a paycheck directly from the party with which you are in dispute.
As such, H.R. 1020 has been introduced in the US Congress to combat the consequences of Mandatory Binding Arbitration. Also known as the Arbitration Fairness Act of 2009, the bill would prevent enforcement of predispute Mandatory Binding Arbitration clauses in employment, consumer, or franchise disputes as well as disputes related to federally protected civil rights. While a proponent of both ADR and certain types of Tort Reform, I believe enactment of this bill is necessary to both protect Constitutional rights as well as the fairness and reputation of the ADR process. I encourage you to obtain more information on Mandatory Binding Arbitration and H.R. 1020 and contact your representatives. Also, you should ask when making major purchases or before signing documents, including job and credit card applications, if they contain such clauses.
Jared A. Chambers
