What You Need to Know About Forced Arbitration Part IV: Note to Companies, You Can’t Have it Both Ways

January 31, 2014  |  Other, Forced Arbitration
Here’s a funny side story when it comes to forced arbitration: While companies love to require forced arbitration on all of their business to consumer contracts, companies hate using arbitration to deal with business-to-business problems.

The interesting part about this point is two-fold.

One, it goes against the whole reason arbitration was created in the 1920s: to deal with B2B, or business-to-business, problems. In fact, when arbitration was first created as a way for companies to solve their disputes, it was explicitly said that arbitration should only be used for companies with equal power and that arbitration should never be used by companies to deal with individuals or consumers. You see, in the game of arbitration, an individual versus a company — of any power — is no match, because the power would always be unequal and the company would always be most likely to win.

Two, it shows just how intent corporations are on bypassing an individual’s right to a day in court (a.k.a. justice).

In business-to-business arbitration, arbitration is now widely understood as a practice that is too slow, too tedious, too expensive and too biased towards whomever holds the dominate power. In fact, according to the American Association for Justice, even a leader within the chamber of commerce called arbitration “the poison,” revealing just how severely businesses suffer at its hands. Corporate executives and representatives have even publicly stated their dislike of arbitration for business-to-business proceedings for the same reasons that individuals dislike forced arbitration: too slow, too tedious, too expensive and too biased towards whomever holds the dominate power.

The problem is, while the costly, ineffective and time-consuming procedure that is arbitration is disliked by business executives in B2B situations, its drawbacks are its shining benefits when it comes to consumer problems. When tied to an arbitration clause, most individuals find themselves stymied – unable and unready to proceed towards arbitration. Arbitration can take years after all, and those expenses must be paid by the individual enacting the arbitration. And when an individual gives up — or can’t win — or doesn’t win, the more dominant player benefits.

So here’s our note to corporations everywhere: If you are finding loopholes and ways out of arbitration for business-to-business problems, if you have had enough with the too slow, the too tedious and the too expensive that is arbitration, then take a stand for the American people while you’re at it, too. Just like you don’t like arbitration in your business-to-business ventures, we don’t like forced arbitration in our consumer and employee contracts. After all, you can’t have it both ways.

Kindly, your everyday American citizen and proud customer.

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