8 - The Case against Mandatory Arbitration

Summary

Throughout the 2010s, the Supreme Court of the United States has enforced contractual provisions that force arbitration of disputes and ban class actions. Unsurprisingly, companies quickly went on to instill these mandatory arbitration provisions in their contracts with consumers, employees, and suppliers. A heated debate ensued, bursting out of academic circles and into popular media, over the desirability of such mandatory arbitration revolution. Proponents argued it will improve efficiency, by streamlining dispute resolution and reducing lawyer fees. Opponents argued it will be unfair for the already disadvantaged workers, consumers, and suppliers, depriving them of their day in court. Yet the existing debate too often misses the forest for the trees. Instead of analyzing fairness and efficiency toward parties to a given dispute, we should focus on effects on the market overall.