For years, consumer rights advocates have voiced concerns over corporations insisting consumers agree to contracts containing mandatory arbitration clauses. Advocates’ primary concern is the unequal bargaining power between the parties, which often allows corporations to dictate the terms for arbitration, usually to the detriment of their customers’ legal rights. This unequal bargaining power is cemented in favorable court rulings, like recent U.S. Supreme Court decisions regarding arbitration, and in favorable statutory language, like the text in the Federal Arbitration Act (FAA) limiting judicial review of arbitration decisions and requiring courts to enforce arbitration agreements in accordance with their terms.
In this environment, corporations have practically free rein to craft arbitration clauses as favorable to them as possible because courts usually compel arbitration. But sometimes, corporations seeking to compel mandatory arbitration shoot themselves in the foot by demanding consumers sign contracts with arbitration provisions containing clauses that conflict with the arbitration rules set forth by their chosen arbitration body.
