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Forced Arbitration: What It Is and Why You Should Be Against It

Forced arbitration is becoming a fairly normal clause that's written into contracts and agreements, but most people don't know what it is, or that they even agreed to it. Tennessee injury lawyers at Gilreath & Associates shed light on this complicated legal issue.

Arbitration is another method for settling disputes between two parties that doesn't involve the court. Rather, the two parties present their cases before an arbitrator (or sometimes group of arbitrators). The arbitrator weighs both sides, based on the facts and arguments provided, and then comes to a decision.

Arbitration in it of itself can be a good way to settle disputes. Sometimes two parties voluntarily decide to arbitrate and no one is made to choose that method. The problem is when one side is forcedinto arbitration and doesn't have the choice to stand before a judge.

The Fair Arbitration Now Coalition describes forced arbitration in this way:

A company requires a consumer or employee to submit any dispute that may arise to binding arbitration as a condition of employment or buying a product or service. The employee or consumer is required to waive their right to sue, to participate in a class action lawsuit, or to appeal. Forced arbitration is mandatory, the arbitrator's decision is binding, and the results are not public.

Forced arbitration leaves the employee or consumer powerless. They are bound to whatever the arbitrator decides and cannot appeal their case in court, thus losing their right to a "day in court."

Corruption of the Justice System

What further corrupts the system is that, the majority of the time, arbitrators rule in favor of the employer or business. Often, the arbitrator has already built a relationship with that client and they don't want to lose their business. The New York Times researched cases of forced arbitration and found that "To deliver favorable outcomes to companies, some arbitrators have twisted or outright disregarded the law, interviews and records show." Studies done by Alliance for Justice and the Consumer Financial Protection Bureau provide additional evidence to this fact: they both found that about 93% of arbitration cases are ruled in favor of the business rather than the consumer.

Many companies have added forced arbitration into contracts and agreements because it benefits them. With this clause in place, employees cannot sue for things like discrimination due to sex, age, disability, or race. Consumers cannot sue for defective or dangerous products, scams, or any type of negligence. It takes away the rights and liberties of an employee or consumer, leaving them completely vulnerable to unfair treatment.

The Alliance for Justice also points out:

In addition, nearly all forced arbitration clauses ban class-action suits, which allow individuals to band together to bring their common claims against big corporations. Without the ability to band together, individual claims are often too small to justify the costs of litigation, allowing unscrupulous companies to do small amounts of harm to a large number of people without consequence.

Unfortunately, forced arbitration clauses have become so commonplace that they are very hard to avoid. Today, most insurance and credit card companies, nursing homes, doctors and hospitals, and employers make forced arbitration a mandatory part of any contract. The only way to truly avoid it completely is to fight for legislation to make it illegal.

If you've been a victim of forced arbitration, contact us at Gilreath & Associates. We want to help you get your rights and liberties restored.

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