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Arbitration Attack

Read about two studies that draw divergent conclusions on the fairness of arbitration here.

As the Arbitration Fairness Act of 2007 continues its slow journey through Congress, debate over the bill is escalating. Public Citizen and the U.S. Chamber of Commerce, major voices respectively for and against the bill, have released battling analyses of identical data that either validates or conflicts with the assertion that arbitration favors corporations, depending on which group is analyzing it. Editorials, statistics and anecdotes have popped up in news outlets and blogs, discussing either the stress on the civil litigation system that will heighten if the bill
passes or the harm to individuals that will continue if it does not.

The Act does not tackle the asserted shortcomings of the arbitration system head on; rather, it simply gives consumers, employees and franchisees the chance to weigh the benefits of arbitration and make an informed choice, just as a company can do in deciding whether to arbitrate disputes with another business.

"The companies are saying, 'We need to force consumers into arbitration or they won't do it,'" Arkush says. "That's basically an admission that arbitration is unfair to consumers, because if it were fair, you wouldn't have to force them."

Assuming most companies turn to mandatory arbitration for cost savings, companies would have to budget for increased litigation, at least until they can see the full impact of the bill on their own dispute resolution strategies. Proponents of the bill say such pains are necessary to ensure fairness in a flawed system, and that the Arbitration Fairness Act is the only way to do this short of revamping the entire established arbitration system.

"No matter what procedural fixes we put in place, no matter what reforms, no matter what sort of heavy-handed regulation of the conduct of arbitration we might put in place, there are always going to be gaps and loopholes and problems with it," Arkush says.

Associate Editor

Melissa Maleske

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