Mandatory Arbitration Criticism
Discussions focus on the biases and unfairness of mandatory arbitration clauses in consumer and employment contracts, where companies select arbitrators incentivized to rule in their favor, avoiding court costs like lawyer fees.
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What's wrong with arbitration?
Arbitration is why we can't have nice things.
It's not in the company's interest to contract an arbiter that doesn't typically rule in their favor. Customers/workers don't choose the arbiter, the company does. This is a conflict of interest and absolutely is a "causation" thing. Small claims court cases are pretty cheap.
With arbitration, for the company, worst case the company pays the original amount. Without arbitration, in the court, worst case is the company pays the original amount + the clients lawyer fees.
In the US, arbitration is purely a contractual matter between the parties. So, typically, companies (almost all of them these days, it seems) will require the use of arbitration instead of the courts. And they usually get to choose the arbitrator, who derives a great deal of income from that company.There is a lot of economic incentive for arbitrators to find in favor of the company. There is very little economic incentive for them to find in favor of the person who has an issue with the comp
It's usually not reasonable at all, as whoever does the arbitration depends on the large company behind the contract for continued income, and is therefore strongly incentivized to rule in their favor.
I talked to a lawyer a while back and he told me that arbitration is slowly falling out of favor because often one of the parties will simply dispute that the arbitration was fair and it winds up back in court anyway.
The point of arbitration is to settle a problem with the help of a trusted, neutral 3rd party. Forced arbitration does not seem as neutral.
With arbitration, for the company, worst case the company pays the original amount. In the court, worst case is the company pays the original amount + the clients lawyer fees.
Has anyone gone to arbitration over this?