Originally from Dispute Resolution Journal

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I.    INTRODUCTION TO THE FEDERAL ARBITRATION ACT AND MANDATORY ARBITRATION

Since its inception in 1925, and certainly over the last fifty years, the Federal Arbitration Act (“FAA”)—9 U.S.C secs. 1 et seq.—has been interpreted broadly in an attempt to promote a pro–arbitration mindset in the United States. This pro–arbitration mindset has led to the degradation of consumer protections and has eroded litigation as an avenue for individuals to pursue claims in the court system. In a wave of decisions—beginning in 2011—the Supreme Court has repeatedly reaffirmed that the FAA protects the integrity of arbitration clauses. Despite the benefits brought to consumers through the use of class–action proceedings, this means of redress has been effectively nullified by recent Supreme Court case law. Further, the purported purposes of mandatory arbitration clauses and the asserted benefits have not been realized by society. Companies can take advantage of consumers because they rarely understand the contents of consumer contracts. The blind adherence to a pro–arbitration policy leads to the departure from sound public policy. Nevertheless, both consumers and courts can take measures to minimize the effect of mandatory arbitration in the wake of recent Supreme Court jurisprudence. However, for real change to occur, Congress must step in and restore the true intent of the FAA.

II.    DISCUSSION OF THE FEDERAL ARBITRATION ACT AND RECENT SUPREME COURT DECISIONS INSULATING A CORPORATION’S ABILITY TO ENFORCE PRE–DISPUTE ARBITRATION CLAUSES

The FAA was seen as a powerful means to lessen the use of costly and burdensome litigation with less costly and more efficient arbitration. However, over the past half–century the Supreme Court has distorted the true intent of the FAA and fashioned its own interpretation, creating formidable line of defense for arbitration.