No Ripoff Clause logo

No Ripoff Clause

Voluntary Mediation And Mandatory Arbitration: Not At All The Same Thing

April 29th, 2009

By: admin

Voluntary Mediation And Mandatory Arbitration: Not At All The Same Thing

One strategy the corporate lobby uses is to blur the line between mandatory arbitration, which frequently allows corporations to violate laws intended to protect ordinary Americans with impunity, and other, consumer-friendly ways of resolving disagreements that don’t involve taking someone to court, such as mediation (often called “alternative dispute resolution”). For example, corporate lobbyists often cite a 2005 national survey, funded by the U.S. Chamber of Commerce Institute for Legal Reform, as finding that a majority of adults with experience of arbitration considered arbitration faster, simpler, and cheaper than going to court. But this survey was not representative of people’s experiences with pre-dispute, mandatory, arbitration: only 19% of the respondents were required by contract to go to arbitration; the vast majority (81 percent) had voluntarily chosen to enter the arbitration after the dispute arose.1

When a person is trapped or tricked into signing an arbitration clause, the company gets a virtual carte blanche to violate the law. According to a study of almost 20,000 binding mandatory arbitration decisions in credit card disputes, the corporate party prevails a massive 94% of the time.3

“When speaking about mediation and arbitration, it’s important to keep in mind one very simple point: it is fine to ask someone to walk through a door, but it is never ok to push them out of the room.”


1. Harris Interactive, “Arbitration: Simpler, Cheaper, and Faster Than Litigation,” (April 2005) (at p. 9). Nor is this survey at all applicable to employment arbitration; fewer than three percent, if any, of the arbitrations covered by the survey involved claims of discrimination, wage theft, or other illegal employment practices (at p. 12).

2. E-mail correspondence, February 13, 2009, on file with NELA.

3. Public Citizen report,

What's New