The Arbitration Bootstrap

Article - Volume 94 - Issue 2

Arbitration clauses have become ubiquitous. Arbitration clauses require consumers and employees to waive their rights to bring litigation in court, leaving private arbitration as their only avenue to seek redress for violations of any law, including consumer protection laws, antitrust law, and anti-discrimination laws. The arbitration process is less protective of consumers and employees in many ways than the litigation process in public courts. Yet for consumers in many markets, arbitration clauses are unavoidable because firms impose contracts of adhesion that include mandatory arbitration clauses, which require individuals to waive their rights to sue in court.

As the Supreme Court has expanded the categories of legal claims that are subject to mandatory arbitration, firms have begun to load their mandatory arbitration clauses with unconscionable contract terms. This is arbitration bootstrapping—firms inserting terms unrelated to arbitration into an arbitration clause in the hopes that judges will be more likely to enforce those terms.

In the wake of the Supreme Court’s decisions in Concepcion and Italian Colors, judged who have upheld anti-consumer terms in arbitration clauses claim to be merely implementing the will of Congress. Yet the senators and representatives who voted for the Federal Arbitration Act would not recognize today’s arbitration clauses that courts are enforcing in the name of the 1925 Congress. This Article examines the legislative history of the Federal Arbitration Act to show that the enforcement of current arbitration clauses, both as to their reach and their content, is inconsistent with the purpose and the text of the Federal Arbitration Act.

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