Posted On: December 27, 2013 by Nancy Barron

Forced Arbitration Faces the Limelight

The single greatest threat to our system of civil justice in decades is hidden in the tiny print of contracts that few people read. And even fewer understand. The arbitration clause sits quietly in the shadow of contract language, sometimes on the backside of a long form, concealed in unintelligible legalese. Unfortunately, it is language that can matter. It can matter a lot.

When things go wrong - like the bank statement contains charges you know you didn't make, or your new car won't start, or your mother's nursing home has stopped providing promised care, or the pharmacy has substituted poison for a prescription, or the Christmas presents you purchased just never arrived -- you need to be able to seek relief in court. 204756_signing_the_contract.jpg

Forced arbitration - sometimes referred to as "mandatory binding arbitration" - strips consumers and borrowers of their day in court, even though as taxpayers, they already pay for those judges to hear their case.

Corporations know that few consumers can navigate through the private rules of companies that offer judges for hire. The private process is intimidating and inscrutable. And, the participants are sworn to secrecy. No wonder corporations hire lawyers to draft these clauses and then replace ordinary agreements with standard form contracts containing such provisions.

In fact, the whole issue of forced arbitration has gotten little attention. Why? Because it is boring and complicated and not conveyable in sound bites. Lately however, enough people have been cheated, have been tossed out of court, or have been deprived of their right to collective remedy through class actions, that the dark side of arbitration is coming to light. An excellent article on arbitration, "The Arbitration Trap," by Kat Aaron, explaining forced arbitration and recent hearings on proposed federal legislation can be read here.

As a private system meant to replace the courts, arbitration was originally a means of resolving disputes for big companies. It has only recently been forced on consumers. Unable to compete against phalanxes of corporate lawyers, the consumers are far more likely to lose in arbitration than to win. The secrecy of the system has meant that gross injustices to consumers remained behind closed doors. Finally, the faulty system of forced arbitration is coming to light.