Arbitrating Disputes

Companies increasingly are including clauses in contracts with customers and employees that require any disputes to be resolved through arbitration instead of in court. Some of these clauses require disputes to be resolved in individual instead of class actions. Companies say arbitration is quicker and less expensive than litigation not only for businesses but also for customers and employees. But consumer and employee advocacy groups argue that arbitration is tilted in favor of business interests and ends up shielding companies from legal accountability for wrongdoing. A federal law enacted in 1925 helped pave the way for arbitration to become widespread in the United States by providing that agreements to arbitrate disputes were enforceable in court. Since the 1980s, the Supreme Court has issued a series of divided and controversial opinions expanding the scope of the law. Meanwhile, Congress has exempted some groups, such as car dealers and poultry producers, from mandatory arbitration clauses, but it has not acted on broader proposals to limit arbitration for consumers and workers.