The Fair Arbitration Act is a bill created by Republican senator Jeff Sessions that would implement procedural requirements on arbitration proceedings. Although this bill, based on the provisions of the American Arbitration Association's Consumer Due Process Protocol, should have bipartisan support, it has been ignored by the media in favor of the extremist Arbitration Fairness Act, which would render unenforceable every consumer arbitration agreement, even if it has value to the consumer. Moreover, Congress has never given fair consideration to the Fair Arbitration Act. This article examines possible reasons for this unfortunate oversight.
Likely
Legitimacy of class action waivers
Jean Sternlight posits that the Fair Arbitration Act was opposed by consumer groups since it would legitimize individual arbitration over class action litigation as a way to resolve disputes.[1]
Possible
Poor drafting
The bill is poorly drafted. Examples of poor drafting include provisions micromanaging the arbitration process, text that eviscerates procedural rights the bill intends to create, a definition of "small claims court" that arbitrarily excludes consumers in certain states from having the option to go to small claims court instead of arbitration merely because of the structure of their state's court system, and limited remedies that have the effect of creating a Groundhog Day-style loop whenever arbitration is conducted pursuant to a contract violating the Fair Arbitration Act that prohibits the arbitrator from modifying its provisions. This has led to misinterpretations by the few scholars who have seriously examined the bill.
Critics want to continue to trot out examples of perceived problems with arbitration
Critics still trot out the same old anecdotes and outdated information about arbitration. Such misinformation is still sadly commonly presented by Public Citizen and the like include
- high filing fees
- distant arbitration locations
- limitations on relief
- statements that the business picks the individual arbitrator
- NAF win rate
Unfair provisions are very rare in current arbitration provisions, especially those of major businesses.[2]
Perhaps Public Citizen and the like recognize that an express prohibition on unfair arbitration practices that opponents can point to would seriously jeopardize their ability to bring up seductive yet inaccurate criticisms of arbitration.
Jeff Sessions or Republicans are bluffing
Another hypothesis is that Jeff Sessions or the Republican Party wanted to put out token arbitration reform legislation that they didn't actually want to pass. Evidence for this includes the late date of introduction for the 2000 and 2002 bills (October 17, 2000 and October 1, 2002, respectively).
Tinfoil hat
Trade groups wanting to preserve arbitration fear-mongering
David Horton wrote that consumer-friendly features of some arbitration clauses were primarily drafted so that judges could rule that the accompanying class action waivers are not unconscionable, rather than to actually encourage consumers to bring claims in arbitration.[3] One hypothesis (approaching conspiracy theory territory) is that businesses, knowing that courts will enforce the fair arbitration terms they have drafted, encourage or at least do nothing to stop fear-mongering by Public Citizen and their allies about arbitration, in the belief that such fear-mongering will discourage consumers from proceeding to arbitration. In such a case, the business would get the best of both worlds: not having to face class action lawsuits, as well as not having to bear the expense and risk of consumer-initiated arbitration cases.
References
- ↑ Sternlight, Jean R. "Consumer arbitration". In Arbitration Law in America. New York: Cambridge University Press, 2006, at 181.
- ↑ Rutledge, Peter B. and Christopher R. Drahozal. "Contract and Choice" 2013 B.Y.U. L. Rev. 1
- ↑ Horton, David. "The Shadow Terms: Contract Procedure and Unilateral Amendments" 57 U.C.L.A. L. Rev. 605, 655