Mandatory binding arbitration clauses are now found in a vast majority of consumer contracts, ranging from credit card and cell phone agreements to real estate purchase agreements and car rental agreements. In recent years there has been an expansion of arbitration clauses in the employment setting and with medical providers and nursing homes.
Arbitrations became popular dating back to the early 1920’s. The courts favor arbitration agreements and they are generally enforced.
The downside to arbitration clauses are:
- Loss of a right for a jury trial, a trial of your peers;
- Limitation on appellate review;
- Arbitrations are generally confidential;
- Arbitration clauses may prevent individuals from bringing, joining, or participating in class action claims; or
- An arbitration clause may include loser paying provisions which may have a chilling effect on individuals bringing claims.
While arbitration clauses are generally thought as being positive there are downsides, which may include hidden fees and expenses.