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Wednesday, June 22, 2016

The Politics of Arbitration Law and Centrist Proposals for Reform

My latest article, The Politics of Arbitration Law and Centrist Proposals for Reform, is in the Harvard Journal on Legislation. Stephen J. Ware, The Politics of Arbitration Law and Centrist Proposals for Reform, 53 Harvard J. on Legislation 711 (2016).

The abstract:

Arbitration law in the United States is far more controversial when applied
to individuals than to businesses. While enforcement of arbitration agreements
between businesses sometimes raises legal issues that divide courts, those issues
tend to interest only scholars, lawyers, and other specialists in the field of arbitration.
In contrast, enforcement of arbitration agreements between a business
and an individual (such as a consumer or employee) raises legal issues that
interest many members of Congress and various interest groups, all of whom
have taken positions on significant proposals for law reform. The Consumer
Financial Protection Bureau has extensively researched and reported on consumer
arbitration agreements and is expected to issue a rule regulating, or even
prohibiting, such agreements.

This Article both explains how issues surrounding consumer and other adhesive
arbitration agreements became divisive along predictable political lines
and introduces a framework to understand and compare various positions on
them. This new framework arrays on a continuum five positions on the level of
consent the law should require before enforcing an arbitration agreement
against an individual. Progressives generally would require higher levels of
consent than arbitration law currently requires, while conservatives generally
defend current arbitration law’s low standards of consent.

This Article proposes a centrist position. It joins progressives in rejecting
overbroad enforcement of adhesive arbitration agreements due to conservative supported
anomalies in arbitration law’s treatment of contract-law defenses, legally-
erroneous decisions, and class actions. Once these anomalies are fixed,
though, this Article joins conservatives in defending general enforcement of adhesive
arbitration agreements under contract law’s standards of consent because
adhesive arbitration agreements should—contrary to progressive opinions—be
as generally enforceable as other adhesion contracts. This Article briefly concludes
by proposing language for a rule the Consumer Financial Protection Bureau
could adopt to enact the reforms advocated in this Article.

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