Mandatory Arbitration Essay

Mandatory Arbitration Infringes on the Rights of the Consumers

Barbara Kate Repa, a lawyer and journalist, defines arbitration as "... essentially, a contractual term that is included in a wide variety of agreements between two or more parties. This clause demands that any disputes that arise between these parties out of contracts or transactions be settled through an arbitration proceeding"(1) Arbitration is a form of ADR, Alternative Dispute Resolution, that is an alternaitve to a trial by jury. Instead of a judge deciding in favor of one of the parties during litigation, an arbitrator is able to make a legally binding decision. Arbitration was designed to be more beneficial to both parties over litigation as it's faster, cheaper, has

This often results in fewer individuals choosing to go forward with arbitration when a dispute arises. Without increased regulation of the arbitration process and rules, corporations can engineer clauses to exploit consumers. According to Honore Johnson, a researcher at Cornell University, corporations often insert arbitration clauses into their contractual agreements in order to increase the odds that litigation will not go forth when a dispute arises.

And that is due to the fact that punitive damages are rarely part of arbitration awards. This gives the corporation less incentive to refrain from future wrong doings. The predictive nature of arbitration is another major plus for corporations. Because arbitrators are not required to strictly adhere to the law when making a decision, but are paid for their time, they are more likely to make a lawfully correct decicion. According to Stephen Smith, an international arbitration lawyer, arbitrators are not required to strictly follow the law when making a decision on a dispute. However, arbitratrators are more likey than court judges to correctly follow the law. They are paid, more qualified in business and civil law, and able to take take ample time to make a proper decision.