Chicago Business Litigation Lawyer Blog
Arbitration agreements have been sneaking their way into all sorts of contracts, from employment contracts to loan agreements. Originally intended to allow businesses or parties to settle complex disputes between themselves more efficiently, many companies have perverted their use so that they can require arbitration whenever anyone at all has a dispute with them, even individual employees or consumers over relatively small amounts of money or in situations where courts are much better suited to resolve the disputes. The Courts honor freedom of contract principles and allow for enforcement of arbitration agreements so businesses are using them frequently.
Arbitration agreements can have a number of drawbacks for plaintiffs. The first is that they don’t allow class actions, which means individuals with small claims against a company have no way of combining their claims with other people to create one lawsuit large enough to justify the expenses associated with filing a legal complaint.
Arbitration is also private. They are heard and ruled by for-profit companies, not objective judges or juries. Companies that pay for the arbitration, or bring a lot of business to a single arbitrator, are more likely to get a favorable ruling from that arbitrator. There are arbitrators known for their objectivity and fairness, but some corporations retain the right to choose the arbitrator, and when they have the opportunity to choose between one they have a relationship with and one whose ruling may be unpredictable, the company has little motivation to choose the unbiased arbitrator. Continue reading ›