Arbitration as rudderless justice:


The existence and effects of arbitration agreements cannot now be disputed. Both the state and federal courts have unanimously affirmed the applicability of arbitration clauses, the enforceability of arbitration clauses to the extent to which the system favors sending matters to arbitration. There has been much written both scholarly and newsworthy articles about the implementation of the Federal Arbitration Act and the implementation of the general concept of arbitration as a method of privatized justice.

I would estimate that a majority of the opinions on arbitration clauses address the entire unfairness of the implementation. The question is something as follows; how can these big businesses use arbitration clauses and shield themselves from judges, juries and the impact of class actions?

The answer appears to be rather simplistic; because they can.  The system has given these entities an out. There is a loophole. The corporations have taken advantage of specific holdings of the court to reduce their liability, reduce their exposure to lawsuits and class actions. One cannot fault a corporation or any business or entity or individual from taking advantage of this particular law. It applies to everybody across the board and is intended to reduce the burden on the courts.  It is based on the underlying concept that individuals and entities are free to contract their rights away. It is a free country? Individuals are free to bargain away whatever rights they want? This is America. This is a free country.

So I guess, inherently, I do not have a tremendous issue with the existence and implementation of arbitration laws as they are there are used by businesses to avoid the civil justice system. The results might be good the results might be bad but I think we are asking the wrong question.

I would submit that we are asking the wrong question. The question should be what is the social cost of arbitration? If we truly look at the cost of arbitration, the cost of privatized justice in terms of the rule of law and a social contract between us it would be difficult to understand how anybody would think that arbitration is a good thing. Honestly, I think the implementation of a wide scale base privatized justice, and the obliteration of open court system results in anarchy.  This is the job of Judge NOT a lawyer to make decisions.  Judges are our saving grace. 

At first blush, you probably think that this is a wild exaggeration. If you really think about the effect of privatized justice and the secrecy of arbitration I submit that be difficult to conclude that arbitration as a social sail or rudder is a good thing. (I am coining a new phrase in lieu of privatized justice I am going to call it rudderless-judgeless justice)

This country is based on the rule of law. The rule of law is implemented by the judiciary. The judiciary is its own independent branch of government. It is the job of the judiciary to enforce the law in an open and notorious manner so as to be completely transparent. A major all underlying foundation that permits the judiciary to implement consistency and social justice is stare decisis.  In simple terms judges are required to follow the law as handed down by prior judges. The law can change based on changing social conditions and these changes are implemented by the Supreme Court, the ultimate judicial body in the state and the Country.

Now for second please imagine the practice of law and the implementation of laws if there were no Supreme Court. I know it seems crazy but please try to this for a minute.  The Supreme Court is charged with making the ultimate interpretation of the law in each state. They take this interpretation they write it down so to be followed by both individuals and the courts. Over time the social mores change and the Supreme Court will change their interpretation of the laws.  Examples of this are so numerous and need not be specifically addressed. However all attorneys and participants in the system would clearly agree that the current state of the law changes based on the social conditions. It is imperative that the law changed to reflect the appropriate social conditions so as to have credibility.

What happens if there are no written decisions for the lower courts to follow? What happens if there no written decisions to guide the social contract? What if there were not published decisions for lower courts to follow?  What happens if the last time the Supreme Court decided a case on the New Jersey Consumer Fraud Act was based on a transaction from twelve years ago?  Social conditions change and the interpretation of the laws are fluid to reflect the changing social conditions.

So let us take a look at the impact of arbitration. The hearings are not open to the public. There are no records created with most hearings. The decisions cannot be challenged. Most times the right to appeal has been abandoned. Moreover, the lack of transparency, and the lack of guidance in published BINDING decisions creates a vacuum for the social contract. What do I mean by this?

Social mores may change but the laws do not change once we have wide scale implementation of arbitration. How are the courts supposed to reflect the change in the law with the changing social values if there no cases to decide? In my opinion, the courts have been at the headwaters of every single social change in this country. What if Rosa Parks had purchased a ticket with an arbitration agreement on it when she entered that bus in Alabama?  That case never would never have made it to the Supreme Court. A major chapter in American history would have been eviscerated.

The civil justice system is its own safety net for those who participate. Without access to the system there is no safety net. There is no confidence that the differences can be decided in a civilized manner. Remember, perception is reality. If people do not perceive arbitration is fair than what motivation do they have to participate in the system? What if people began to take their own civil justice into their own hands? What if you had a dispute with your landscaper but you cannot take in the Small Claims Court because the landscaping agreement you signed had an arbitration clause.

I would think that this could potentially create more friction between the parties without the ability to timely, fairly, adequately, and in an open and notorious manner to resolve the dispute.  I assure they will apply their own civil justice in their own distorted manner. It is imperative that there be a method for the public to address the civil disputes with their neighbor and entities with which they do business. In this country everybody does business with the credit card companies and banks, car dealerships and major big-box stores all of whom have arbitration agreements in every single piece of paper you sign. I hope you can now see the issue which needs to be addressed is a social issue rather than an efficiency issue.

The efficiency of privatized justice does not justify the social cost.

Contact Information