Pre-Dispute Binding Arbitration Clauses Perpetuate Injustice


When someone is wronged by another, he or she expects to find recourse in our justice system. When a corporation takes advantage of a consumer, that person often takes solace in the fact that she will have her day in court. More and more, however, these hopes and expectations are never realized. Victims are shocked to learn that they have contractually signed away their right to go to court.

Many (if not most) consumer contracts, from cell phone plans to credit card agreements, now contain what are known as Pre-Dispute Mandatory Binding Arbitration clauses. These clauses require that any dispute that should arise out of the contract must be settled by binding arbitration rather than by filing suit in a court of law. Nearly always, the result is worse for the consumer. Arbitration clauses are usually hidden in dense legal documents, making it hard for the average person to even know if the contract contains such a provision. Even if the consumer is aware of the mandatory arbitration requirement, he or she cannot negotiate it out of these all-or-nothing contracts of adhesion.

In many cases, these pre-dispute mandatory arbitration clauses result in manifest injustice. National Public Radio (NPR) recently reported on one of the most appalling instances of the iniquity of mandatory binding arbitration clauses. A 20-year-old female Halliburton employee working in Iraq was brutally assaulted by her coworkers, resulting in devastating and permanent physical and emotional injuries. When the Justice Department refused to intervene, this young woman sought accountability by suing in civil court. Unbelievably, the company insists that the case must go to binding arbitration rather than a judge and jury.

Pre-dispute mandatory binding arbitration agreements represent a fundamentally unfair method for holding corporations responsible for their wrongdoings. Consumers and employees are kept in the dark as to their rights, and they are not free to bargain for a better deal. Instead, they must “take it or leave it” and run the risk of facing a potentially biased tribunal who will decide the outcome of their case.

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