Mandatory Arbitration: Due Process and Other Constitutional Concerns

Arbitration is so prevalent that one can find arbitration agreements in many different types of contracts involving consumer goods, employment, bank deposits, credit cards, and a whole host of other arrangements. Frequently, businesses place non-negotiable arbitration agreements in their consumer and employment contracts, thereby, creating a mandatory arbitration system for disputes arising under such contracts. Courts readily enforce these arbitration agreements, mostly in furtherance of the Supreme Court-created federal policy in favor of arbitration. Some of the enthusiasm for arbitration is premised on allegations that it reduces litigation cost and provides speedy resolutions of disputes. But, there is much controversy about mandatory arbitration and some unresolved issues that are worthy of consideration by courts and others who are involved in this important debate. For example, there is still a disagreement over whether arbitration is a neutral process or one that is biased in favor of corporations and other repeat defendants. The available evidence is inconclusive, allowing arguments for both sides. Thus, some contend that the arbitration of employment disputes favors employers whereas others assert that arbitration offers benefits that employees might not otherwise obtain. The same lack of consensus exists over the arbitration of consumer disputes. Despite the lack of clarity on these issues, opponents of mandatory arbitration do raise several important arguments about process dangers to consumers, employees, and other plaintiffs who must accept arbitration under adhesion agreements. This article discusses some of the dangers posed by mandatory arbitration.