The Downside of Binding/Mandatory Arbitration


Published on

Published in: Education
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

The Downside of Binding/Mandatory Arbitration

  1. 1. Why Mandatory Binding Arbitration is Bad for Injury VictimsOregon drivers who have been injured by other negligent road users have always had the right toconsult Portland personal injury lawyers and seek compensation through the courts. In these cases,a judge or jury listens to the evidence presented from witnesses to the accident, doctors who havetreated the injured driver and employers or accountants who can testify as to lost income.The court then makes a fair determination of the award that should be made to the injured party.Most would see this as a fair and just system, but more and more insurance companies are trying tohave cases settled through a system known as binding arbitration.Rather than streamlining the process and speeding up the settlement of claims, which is the slantbeing placed on the issue of binding arbitration by the insurance companies, opponents say it’sreally about saving money and increasing corporate profits by taking away a consumers right to getjustice through the courts.How binding arbitration works“Mandatory binding arbitration” means both sides to a potential dispute supposedly agree to allow athird party arbitrator (or a panel of arbitrators) resolve a dispute. This would remove a jury and/orjudge from the process completely. Instead, the arbitrator—who is not required to have any legaltraining whatever, and who is not even required to follow the rule of law—makes a final decision onthe case. In binding arbitration, no one is allowed to appeal or dispute that decision in any way.Several other factors make mandatory binding arbitration a daunting prospect. Portland personalinjury lawyers have pointed out what they see as major flaws in the process, including: • Rights of discovery are very limited; court rules of evidence and procedure do not apply. • Access to important documents that may help a victim’s claim is restricted. • Arbitration proceedings are held in private; no public access is allowed. • Arbitrators are not required, and as a rule do not, write or publish detailed written opinions, so no legal precedents can be established. • Arbitrator’s decisions are enforceable by law, even if they are legally incorrect!Arbitration clauses are often justified on the basis that people enter them voluntarily, whereas mostpeople don’t even know they’ve signed such a clause. The “mandatory” element means people areactually compelled to go to arbitration before the dispute has even arisen. What’s more, entireindustries are now inserting mandatory arbitration clauses into their standard contracts, so to saythat people have voluntarily agreed to binding arbitration is not exactly accurate.You’ve probably agreed to binding arbitration without even knowing itMandatory binding arbitration has been around for a very long time. If you weren’t aware of it,that’s because the clauses were probably buried in very fine print on page 17 of a 20-page
  2. 2. agreement. However, in spite of not knowing of your agreement to binding arbitration, you mighthave forfeited your rights to accessing the courts if in the last 10 years you ever: • Used a credit card • Bought a car or computer • Took out a bank loan • Signed a real estate contract • Used a cell phone • Invested in stocks • Took out insurance • Consulted a doctor • Worked for a large company or corporationArbitrators are not chosen by the plaintiffBinding arbitration has several inherent advantages for the businesses and few for the individuals.For starters, arbitrators can actually be on contract to the business against which the claim is beingmade. What’s more, the business is virtually always allowed to select the arbitrator, never thevictim. Without question, this creates a quite natural bias on the part of the arbitrators to rule in themost favorable way to the people who are paying them. They are naturally inclined to side withcorporations that will give them more cases and generate repeat business and a consistent incomestream.Even if multiple arbitrators are available, companies who are frequently in dispute will know fromexperience how a particular arbitrator is likely to rule in a specific type of case. They will thereforeknow which arbitrator to choose to get the best possible result, to the detriment of the victim.What about saving time? Isn’t that, at least, a good thing?Getting an arbitration case heard and the dispute settled quickly is a misconception. On thecontrary, these cases can take years to be heard. What’s more, clauses are often inserted that sayhearings must be held in locations large distances from the claimant’s residence. Then there are thecosts. Portland personal injury lawyers take cases on a contingency basis, whereby victims payabsolutely nothing unless their case is won. With binding arbitration, victims pay nothing up frontbut actually have to split the arbitrator’s fees. This can amount to several thousand dollars per hour.Personal injury victims who have already paid out huge sums in medical costs and ongoingtreatment, who may have lost significant income through missing work, have had their familiesalready disrupted and are in ongoing pain or are even disabled can find attending these arbitrationhearings even more punitive than what they’ve already been through. And they’re the victims!
  3. 3. What makes the case against mandatory binding arbitration even stronger is the possibly surprisingfact that when one company is taking an action against another, neither will, generally speaking,want to have binding arbitration to settle their dispute. Companies prefer litigation and courts whendealing with each other, but prefer binding arbitration when dealing with individuals! This mayexplain why a recent study showed telecommunications and financial companies have bindingarbitration clauses built into 75 percent of their consumer contracts, but fewer than 10 percent ofinter-company contracts.Oregon auto insurance companies may want to insert mandatory binding arbitration into theirpolicies, but Portland personal injury lawyers are warning consumers to be very wary of enteringsuch agreements. The only real advantages to binding arbitration lie with the companies, not theinjured individuals. The best way for an accident victim to get true justice and fair compensation is tohave an experienced and reputable team of Portland personal injury lawyers take their case. Theinsurance companies won’t want to go to court because they know the injured party is far morelikely to receive a fairer hearing and greater compensation than if they go to binding arbitration.