The National Arbitration Forum Blog

In 'Fairness' Looms in New Congress (subscription required), published in the November 24th National Law Journal, author Michael J. Lockerby analyzes proposed legislation that would broadly prohibit a wide range of disputes from proceeding to arbitration. The Arbitration Fairness Act of 2007 (AFA) would invalidate pre-dispute agreements to arbitrate consumer, employment, and franchise disputes, among others.

Pointing to the fact that arbitration is fundamentally less expensive than litigation, he writes that it is "overly simplistic" to conclude that enactment of the AFA would benefit employees, consumers and franchisees (and perhaps small business). In reality, passage of the AFA could make it easier for "deep pocket" defendants to shoulder the costs of discovery, appeals, and other aspects of the litigation process and win a battle of financial attrition in court. These litigation costs, in turn, would be passed along to consumers by increased cost of goods and services.

Mr. Lockerby, a partner in the Washington office of Foley & Lardner, concludes with his reading of the bill's ultimate winner.

In short, the likely winners and losers if the AFA or similar legislation becomes law may not necessarily be as clear as the politics of the debate might seem to suggest — with one possible exception. Enactment of the AFA will surely benefit the members of one of the advocacy groups that supports limiting the enforceability of arbitration clauses. That organization, the American Association for Justice, is perhaps more commonly known by its former name: the Association of Trial Lawyers of America.

The fact is arbitration is the best option for consumers to resolve disputes.

See Also:

• Arbitration Allows Courts to Do More With Less
• And Now You Know the Rest of the Story
• AFA Would Violate Treaty Obligations, Demolish Int'l Arbitration, Lawyers Say
• LA Times Reports on Arbitration Legislation
• Studies Draw Positive Conclusions about Consumer Arbitration