As I am finishing up the semester teaching dispute resolution and focusing on arbitration, we’ve been having lots of fun in class finding mandatory arbitration clauses in our life — credit cards, cell phones, apartment leases, etc. My favorite clause to teach is from Gateway Computers, which used to have a clause requiring arbitration under the International Chamber of Commerce rules. My guess is that some junior associate drafting the clause thought it would be great to go to Paris on a regular basis!
I point out in class that there have been proposals to limit mandatory arbitration, but that there is generally little expectation these would be passed by the Senate or House. This year, however, the news might be different with the Democrats taking over. As Vicky Pynchon has helpfully posted, there is now new contemplation that the bill could be passed. The bill, proposed by Wisconsin Senator Russ Feingold last summer, provides:
Arbitration Fairness Act of 2007 – Declares that no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of: (1) an employment, consumer, or franchise dispute, or (2) a dispute arising under any statute intended to protect civil rights or to regulate contracts or transactions between parties of unequal bargaining power.
Declares, further, that the validity or enforceability of an agreement to arbitrate shall be determined by a court, under federal law, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement.
Exempts arbitration provisions in collective bargaining agreements from this Act.
So . . . it will be interesting to watch how the new party in charge deals with issue of mandatory arbitration (and if we have to rewrite the arbitration chapters in our textbooks once again!).
Cross posted at Indisputably.