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Enforcement of arbitration agreements, P.2

In our previous post, we began looking at the issue of contractually mandated mediation and arbitration agreements, and specifically the enforcement of these agreements in court. That fact is that mandatory mediation and arbitration contract clauses are not always enforceable in court, and it is important for readers to be aware for signals of a potentially problematic agreement.

One possibility which could land a mandatory mediation or arbitration agreement in court is that the agreement was one-sided or fundamentally unfair. In consumer contracts, unconscionability with respect to mandatory arbitration agreements may arise from the fact that consumers do not negotiate the terms of the contract and may not voluntarily agree to the arbitration clause. If a consumer did not voluntarily agree to mandated arbitration or mediation, there may be legal problems with enforcement.

Unconscionabilty with respect to mandatory arbitration clauses can also arise in employment contracts. In cases where an employment contract presents a mandatory arbitration agreement on a take it or leave it basis, as a condition of employment, it may not be enforceable. This is especially the case when the employee agrees to such an agreement without actually viewing the language of the agreement until a later time.

Even though mandatory arbitration agreements can be deemed unconscionable in some circumstances, individuals should always be cautious about entering into these agreements. Usually they are enforced, and this can lead to high costs for initiating an arbitration proceeding, facing arbitrator bias for businesses, and things like limited ability to conduct the discovery process, having to arbitrate in an inconvenient venue and prohibition of class action lawsuits.

Although mediation and arbitration can be a beneficial process when it is voluntarily entered into, it may not be so in cases where it is contractually imposed without negotiation. Individuals who feel they may have had a mandatory arbitration agreement unfairly imposed upon them should get in contract with an experienced attorney for advice and guidance.

Sources: Public Citizen, “Mandatory Arbitration Clauses: Undermining the Rights of Consumers, Employees, and Small Businesses,” Accessed Dec. 26, 2014. 

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