Pre-dispute arbitration principles were established in 1925 by Congress through the Federal Arbitration Act (FAA) and were meant to “create an efficient way for businesses with comparable bargaining power to negotiate and agree upon an alternative means of conflict resolution.” However, the driving legal maxims behind the FAA failed to address cases with a large power imbalance between the parties. Arbitration in such cases usually see a company “likely be[ing] represented in arbitration by lawyers who are well-versed in the process and the issue involved, while the wronged customer must find an attorney willing to represent them for what is likely a meager award, if any.” The benefits of forced arbitration led to corporations adopting the practice on a massive scale to the extent where the advocacy group Public Citizen put forth a statement that “[f]orced arbitration has crept into virtually every sector of Americans’ lives.”
This post was originally published on the Cardozo Journal of Conflict Resolution website on October 10, 2022. The original post can be accessed via the Archived Link button above.
Xu, Andy (Chen Di), "Reconsideration of Forced Arbitration in Data Privacy Legislation" (2022). CJCR Blog. 43.