Tuesday, November 16, 2010

Arbitration in the crosshairs

I attended an arbitration seminar at my Inns of Court tonight that was put on in conjunction with the AAA. Arbitration is controversial in that no appellate rights really exist in the absence of fraud or mistake. Further, despite the reported cost savings over protracted civil litigation, administrative and panel neutral fees can be expensive.

Suffice it to say that arbitration is becoming unpopular at least in the consumer side of law, with unconscionable agreements and clauses being attacked and litigated.

As the recent oral argument in the case of AT&T Mobility LLC v. Concepcion has raised the question whether the federal act permitting arbitration forbids states from overriding contractual waivers of the right to bring class action lawsuits. AT&T’s practice of drafting contracts with the clause blocking class-action filings in favor of arbitration is not unique, with many such companies adopting that language.

Of course, large companies favor negotiations handled in a confidential setting. That is one of the benefits touted of arbitration, versus a public court file and trial.

The ultimate outcome in that U.S. Supreme Court matter will certainly have important nationwide ramifications for consumers and businesses alike.