Arbitration Rights at Risk?

Published: April 1, 2009

There’s a good article out today regarding a bill currently in Congress being called the Arbitration Fairness Act. As you read his article, excerpted below, it sounds like anything but a fairness act. Rather, it sounds like another end run at consumers by the group that brought you housing defect litigation that abused many builders into bankruptcy a few years ago. Yeah, the frivolous lawsuit boys.  Go figure. Times are tough.

I contacted NAR about this as I can find no reference to it on Turns out the bill(s) are only recently introduced and NAR is on them. Their response:

The arbitration bill is a new one (there are two versions in the House – HR 1020, HR 1237 and S. 512and one in the Senate) and we are in the process of analyzing. Right now the bills have just been introduced.  They may find traction in the House but the Senate (as usual) will present some obstacles.  We recognized the problems that this would create for purchase contracts and will be on the case.

By the way, if you want to see what other Legislative Issues NAR is involved with, check here. There’s a broad range and scope of issues keeping Chief Lobbyist Jerry Giovaniello and our D.C. crew busy these days – as you might imagine. It’s an impressive summary of involvement and well worth investing in the Realtor Action Fund.

Well, you can draw your own conclusions but that’s my $.02. I could be wrong. Read this article.

Individual Arbitration Rights At Risk

By Richard Olivastro
April 1, 2009

For more than 80 years, arbitration has helped Americans settle disputes fairly, quickly and inexpensively, without having to file a lawsuit or navigate the court system. But, now individual arbitration rights are at risk due to congressional tinkering. The so-called Arbitration Fairness Act, introduced last month in Congress, would affect almost everyone in the country. If passed, the bill would, in effect, nullify arbitration agreements which now exist in potentially millions of consumer, employment and franchise contracts, leaving individuals with little recourse in the event of a dispute — except to file a lawsuit.

While the bill’s sponsor touts the bill as “consumer-friendly” legislation – allegedly allowing the public a choice in determining how to resolve conflicts with major businesses or employers – in reality eliminating pre-dispute arbitration is tantamount to eliminating arbitration altogether. After all, if both parties do not commit to arbitration before a dispute might arise; inevitably one side will typically believe they have enough incentive to file a lawsuit — forcing the case into our already over-burdened court system.


In addition to the significant legal costs faced by businesses, litigation is also ultimately a more costly option for the majority of consumers, who must then hire an attorney to take their case.

Conversely, at present, consumers have been able to file and pursue arbitration at minimal cost — and, overall, are happy with the results. Here’s empirical data on arbitration costs, consumer satisfaction, and more.

A 2005 study of arbitration participants conducted by Harris Interactive found that over 70 percent were satisfied with both the fairness of the process and the outcome — including a sizeable number of those who did not ultimately win their arbitrations.


Fair minded Americans can only conclude that the ‘so-called’ Arbitration Fairness Act is yet another example of the U.S. Congress – in response to powerful special interest group supporters – attempting to “fix” a system that isn’t broken; and, in the process, willfully dumping tens of thousands of cases into our court system and discouraging consumers with small claims from seeking redress.

Arbitration has proven to be cheaper, faster – and based on the national Harris survey – a fairer means of dispute resolution for individuals. To do away with it now, would leave many consumers and businesses out in the cold.

Last modified: April 1, 2009 at 10:59 am | Originally published: April 1, 2009 at 10:59 am
Printed: September 25, 2020