Saturday, February 20, 2016

Is Mandatory Arbitration Bad for Business?

Big fightA recent article in The Economist, The big fight, notes that European companies are far ahead of American companies in developing dispute esolution systems for consumer disputes, especially in online ADR. I think a good case can be made that SCOTUS's pro-arbitration line of cases -- especially those that all but extinguish consumer class actions -- have removed the incentive for American companies to invest in developing effective dispute-resolution programs. As a result, American companies risk falling yet farther behind their European competitors.

Here's some key language from the article in The Economist:

The more consumer-friendly stance [of European companies] did not just evolve in the courts but was to a large degree the result of a decision y the European Commission more than 20 years ago to make all small print subject to being examined and potentially overturned by the courts.... The most recent [directive] gives a shot in the arm to ADR, by for instance forcing businesses to inform consumers of their dispute-resolution options.... Firms won't be forced to sign up to an ADR scheme, but eh hope is that most will feel obliged to as the directive takes hold.

Europe also leads the way in developing online mechanisms for mediating the millions of cross-border e-commerce disputes that arise each year.

rb

https://lawprofessors.typepad.com/laborprof_blog/2016/02/is-mandatory-arbitration-bad-for-business.html

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