New law seeks to level the playing field for contractual arbitration provisions.
On July 13, 2007, U.S. Senator Russ Feingold (D, WI) and U.S. Representative Hank Johnson (D, GA) introduced the Arbitration Fairness Act of 2007. The comprehensive legislation amends the Federal Arbitration Act to ensure Americans are not forced into mandatory arbitration agreements in employment, consumer, franchise or civil disputes. This legislation is intended to prevent consumers from unknowingly giving up their rights to file a lawsuit or a trial by jury for disputes involving consumer contracts.
The recent trend has been for most if not all consumer contracts to include mandatory binding arbitration as a dispute resolution mechanism. Such contracts include cellular telephone service contracts, automobile purchase agreements, equipment leases, and credit card agreements. Often consumers find out after the fact that these clauses are included in their agreements, often buried in the fine print. Courts will routinely enforce the arbitration provisions meaning that the consumer cannot file a lawsuit but must go through arbitration to resolve a dispute.
Arbitration is often cited as being easier, less complicated and less expensive than filing a lawsuit. However, experience now shows that the opposite is now becoming true. The companies on the other side of the arbitration agreement will almost always use a lawyer for the arbitration. If that is the case, consumers must hire a lawyer of their own or risk being ambushed at the arbitration hearing. As such, the arbitration proceeding itself is now almost as complicated as a trial and just as lengthy as well. Often, if a consumer hires a lawyer for a arbitration, there will be little to no difference in the costs and expenses for this proceeding as compared to filing a civil lawsuit.
Above all, the biggest fundamental problem with arbitration is that there is essentially no right to appeal the arbitration decision. The only challenge to an arbitration award is to claim improper conduct or bias on the part of the arbitrator. The fact that the arbitrator made a mistake in fact or in law in making the decision is not one that can be appealed. The inability to appeal a decision is a enormous difference as compared to Court cases that aim to ensure that the decision as rightfully decided.
You are urged to contact your local Senators and Congressman to voice your support for the Arbitration Fairness Act of 2007. To read more about arbitration, the text of the Arbitration Fairness Act of 2007 or to email your Senators and Congressman, please click below: