What is Arbitration?

 Little did you realize when you were applying for that must have

credit card you were assigning away your legal rights to contest any

disputes or disagreements in a court of law.  We all hold onto that

last strand of rope that represents our day in court, our chance at

justice for the underdog.  But hidden in that cardholder agreement

was a clause dictating exactly how future conflicts are to be resolved.

Your day in court is never going to happen.

     Maybe it wasn't in the actual cardholder agreement.  Perhaps it

came as an afterthought, an insert in a credit card statement.  An

update of terms of service, cluttered with an offer to purchase a

combination wallet/calculator with that same line of credit.  No

doubt you threw it in the trash without ever reading it. 

     Binding Mandatory Arbitration.

     But no matter how it entered your financial universe, it subjected

you to something called Binding Mandatory Arbitration.  It stripped

you of your rights and locks you into what many consider a one-sided

decision that benefits everyone but you.

     No Court for you!

     Instead, the arguments of both sides are handed to a third

party, independent arbitrator whose decisions, you've unknowingly

agreed are binding.

     In theory, Arbitration should help.

    While it was created to take the strain off our over-worked court

system, it's become the "weapon of choice" in the battle against the

consumer.  By keeping you out of court, most large organizations can

limit their exposure and liability, no matter how they've harmed you.

     As an alternative to judges or courts settling disputes between

consumers and businesses, binding arbitration seeks a solution

through an independent, third party. Binding arbitration was

intended to save time, money, and energy when two parties disagree

over a contract, service, or the exchange of goods. The arbitrator's

decision is final and cannot be disputed or appealed. More and more,

lenders and big businesses are requiring consumers to sign binding

arbitration agreements, which might lessen the load on courts but

does little to protect a consumer's constitutional rights.

     Businesses prefer binding arbitration because it is more private,

avoiding the possible bad publicity a trial might bring. Other legal

requirements, such as "discovery" take on a different perspective

when arbitration is involved.   For the parties involved, there is no

judge or jury.  In most cases, there is no need of an attorney.

     The controversy surrounding binding arbitration revolves

around people's rights with respect to mandatory and voluntary

arbitration. With mandatory arbitration, a borrower or consumer

must agree to use an arbitrator, rather than the courts, to resolve

any issues. This is required as part of getting a loan financed or

buying large purchases, such as a car. In voluntary arbitration,

after a disagreement arises, the consumer and the company can

agree they find it mutually beneficial to let a third party intervene.

     A consumer has basically waived their constitutional right to

sue, as an individual or with a class action suit, when he or she

signs a mandatory binding arbitration clause as part of a contract.

Consumer advocates point out many people do not know they

have denied themselves that right. Nor are they aware that the

independent arbitrator may have an interest in siding with a

corporation for financial reasons, and may not be entirely

neutral. The fee to file a claim may actually be more than hiring

a lawyer, therefore some advisors suggest consumers think

carefully before agreeing to this course of mediation.*
 

     Definitions of Binding Arbitration:

           Arbitration, in the context of law, is a form of alternative disputer resolution -

specifically, a legal alternative to litigation whereby the parties to a dispute agree

to submit their respective positions (through agreement or hearing) to a neutral

third party (the arbitrator(s) or arbiter(s)) for resolution.

          Arbitration with a final and binding award, which is often enforceable in the courts.
 

          Negotiation in which both parties in a union/management dispute, agree to

accept an impartial observer’s resolution of the dispute.

          The judgment, made by an independent third party, to settle a dispute

between two other parties and may be either voluntary or compulsory.

                                                                                                        * courtesy wisegreek.com