What is forced arbitration?

Forced arbitration is a legal process where disputes are resolved outside of court, typically by a private arbitrator, and it’s mandated by a contract. These clauses often waive the right to sue or join class actions, meaning individuals must handle disputes individually in arbitration. Companies commonly include these clauses in employment agreements, consumer contracts, and terms of service.

Who uses forced arbitration? What is it used for?

Forced arbitration is widely used by businesses, especially in industries like tech, finance, healthcare, and consumer goods. Employers, service providers, and product sellers often include arbitration clauses in contracts to resolve disputes like workplace issues, billing conflicts, or defective products. It’s typically used to avoid costly, lengthy court battles and to limit exposure to class-action lawsuits.

You say it avoids costly, lengthy court battles. I know this is the idea, but in reality is this the case? Or has forced arbitration been used to make seeking recourse more expensive?

In theory, forced arbitration is meant to be faster and cheaper than court battles. However, in practice, it can shift costs to the individual. Filing fees, arbitrator fees, and limited ability to pool resources through class actions often make arbitration more expensive and less accessible for claimants. Additionally, companies usually select arbitration firms that may favor their interests, further discouraging individuals from pursuing their claims.

Who signs forced arbitration agreements? Why would someone give up their rights by signing something like that?

Most people sign forced arbitration agreements without realizing it. They’re often buried in the fine print of employment contracts, terms of service, or purchase agreements. People “agree” because these contracts are typically non-negotiable—if you want the job, the service, or the product, you have to accept the terms. It’s less about willingly giving up rights and more about not having a real choice.

And then if something happens to me that deserves recouse, such as Disney killing my wife via a food allergy, or some injury caused by a company, am I able to receive the jury trial that is prescribed in the law?

Not if you’ve signed a forced arbitration agreement. These clauses typically waive your right to a jury trial, meaning you must resolve disputes through arbitration instead. Even in severe cases, like injury or death, the agreement can block access to the courts. While some extreme scenarios may allow for challenges, like proving the clause is unconscionable, it’s rare for courts to void these agreements.

That feels a bit like I am acting against my own best interest without knowing it, and that the companies are therefore using deceptive practices

You’re not wrong to feel that way. Forced arbitration clauses often rely on consumers or employees not fully understanding what they’re giving up. By hiding these terms in dense contracts and offering no alternatives, companies can protect themselves at your expense. Critics argue this practice is inherently deceptive and undermines fairness by prioritizing corporate interests over individual rights.

Should the legal withstanding of forced arbitration agreements be allowed to continue?

That’s a hotly debated question. Supporters argue forced arbitration reduces court congestion and legal costs. Critics, however, point out it undermines access to justice, shields corporate misconduct, and strips individuals of fundamental rights. Many advocate for reforms to make arbitration optional or ban forced arbitration in certain areas, like employment and consumer disputes, to restore balance and fairness. Whether it should continue hinges on prioritizing fairness over corporate convenience.

I see how arbitration might be able to bring down legal costs in some cases, but is there a benefit to forced arbitration? It seems that as soon as it is forced then it is a subversion of right to recourse

You’re absolutely right—the “forced” aspect of arbitration is where it gets controversial. Voluntary arbitration can be beneficial: it’s quicker, less formal, and sometimes less expensive. But when it’s forced, it often tilts the scales in favor of corporations. The benefit of forced arbitration—if any—is mostly to companies, as it minimizes their legal exposure and avoids the unpredictability of jury verdicts. For individuals, it rarely provides an equivalent upside, making it feel less like a cost-saving tool and more like a rights-limiting tactic.

Can forced arbitration be ended? What laws would need to be passed in order to remove the legal standing of these agreements?

Yes, forced arbitration can be ended through legislative action. For example, Congress could pass laws explicitly banning mandatory arbitration clauses in certain contracts, as they did with the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2022 for workplace harassment cases. Broader reform, like the proposed Forced Arbitration Injustice Repeal (FAIR) Act, would prohibit forced arbitration clauses in employment, consumer, and civil rights cases entirely. Such laws would restore individuals’ rights to choose arbitration voluntarily, rather than being compelled into it.

Is that FAIR act close to passing? How can I support it?

The Forced Arbitration Injustice Repeal (FAIR) Act has been reintroduced in Congress multiple times, most recently in May 2023, CONSUMER FINANCE MONITOR. While it has passed the House of Representatives in previous sessions, it has faced challenges in the Senate and has not yet become law. To support the FAIR Act, you can contact your congressional representatives to express your backing. Organizations like Public Justice offer resources to assist in this process.

Thank you GPT!

Signed by Travis Weber

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