Forced Arbitration Research Articles

Down with the politics, up with the law! Reinforcing EU law’s supervision of sport autonomy in Europe

The rulings of the CJEU in Superleague, Royal Antwerp and ISU endorse some of the characteristics of the European Model of Sport without explicitly referring to it. The Court recognises across the three judgments the specific nature of sport, the cultural importance of sport in Europe, the primacy of sporting merit and equal opportunities in sport competitions, and the relevance of redistribution to maintain amateur and commercial sport intertwined. The CJEU also acknowledges the legitimacy of sport governing bodies as regulators of their sport, but severely limits their autonomy to do so. The judgments are extremely critical of sport governance structures in two main areas: policy-making processes, and accountability mechanisms. The latter is severely criticised with demands for sport federations to produce thorough and convincing evidence that could demonstrate the benefits of their anticompetitive rules and regulations, so they can be granted and exemption under EU law. Furthermore, the Court criticises forced arbitration through the Court of Arbitration for Sport. The judgments assert the primacy of EU law over politics in European sport regulation, whilst also reinforcing the supervised nature of sport autonomy in the European Union. The judgments can also be interpreted as a warning to the Commission, European Parliament, and Council of the EU on the limits of Article 165 TFEU in the development of a European sport policy.

Mandatory Arbitration and Prison Services Contracts: How Private Companies Exploit the Incarcerated and Consumers to Reject Meaningful Accountability

This Comment considers a previously unexamined, and particularly vile, consequence of the movement towards consumer arbitration clauses: their impact on incarcerated people and their families. Incarceration is physically, emotionally, and financially ruinous for both the incarcerated and for families who are routinely forced to subsidize their loved one’s incarceration through paying for things like phone calls and basic needs that prisons fail to meet. The burden on families has only increased as governments have contracted various aspects of correctional systems out to private companies that charge exorbitant prices for basic services, knowing full well that consumers have no choice but to comply if they want to provide for and stay connected to incarcerated loved ones. This system would be inhumane enough without the added element of forced arbitration. This Comment hopes to shine a light on how mandatory arbitration clauses make an already exploitative situation all the worse. Not only are families of the incarcerated charged outrageous and illegal prices to communicate with and protect their loved ones, but mandatory arbitration ensures that they have no real ability to hold responsible companies accountable.

The Concept of Forced Arbitration: An Arbitration with Wrong Footing

In modern times, alternative dispute resolution (“ADR) mechanisms including arbitration have evolved as viable means of resolving commercial and investment related disputes, both within local and international jurisdictions. The popularity and more pronounced acceptance of arbitration over other ADR mechanisms can be traced to its nature as a voluntary agreement, by parties to a main contract, to refer any dispute arising out of or in connection with a contract to arbitration. However, the key consideration of voluntariness which characterizes arbitration agreements have been subjected to varying attitudes especially in the light of what is known as the concept of “forced arbitration”. “Forced arbitration” means a situation where parties to a dispute have been mandatorily referred to arbitration by a contract (especially one in which the parties have unequal bargaining powers or the arbitration clause was inconspicuously included), by a statute or by any other means other than by the voluntary agreement of the parties to the dispute. Forced arbitration could arise either as an inclusion in a contract (especially contracts where the parties have unequal bargaining powers) or as a mandate of statute. Parties are known to use forced arbitration clauses in order to impose procedural challenges on the parties with the weaker bargaining powers. Given that parties have freedom to enter into contracts and are bound by the terms of such contacts, most contracts are enforced by the courts with the inclusion of the forced arbitration clauses. However, in recent times, the courts have begun to invalidate forced arbitration clauses on the ground of unconscionability.

FIFA, Forced Arbitration, and the U.S. Soccer Lawsuits

American soccer has been besieged by lawsuits. In the last two years alone, the United States Soccer Federation (“U.S. Soccer”) has been hit with two antitrust lawsuits, two Equal Pay Act and Title VII gender discrimination lawsuits, and a trademark lawsuit, while two of its professional league members are engaged in their own trademark lawsuit. One threshold question that has received scant attention in the media is whether these disputes should be in federal court at all. Under the Statutes and Regulations of the Fédération Internationale de Football Association (“FIFA”), soccer’s global governing organization, all disputes are required to be arbitrated. Taking a dispute to an ordinary court of law is potentially subject to sanction, which could include suspension or even expulsion. Given this forced arbitration rule, this article considers several possible explanations for why there has been no push to arbitrate the disputes in most of the lawsuits: (1) The enforceability of FIFA’s arbitration requirement has been called into question by recent rulings against forced arbitration clauses; (2) FIFA focuses the enforcement of its arbitration requirement on certain types of cases; (3) FIFA does not consider certain types of claims subject to arbitration; and (4) U.S. Soccer’s bylaws do not impose the arbitration requirement in such a way as it would apply to these types of cases. Although none of these entirely resolve the matter in a satisfactory way, in the aggregate they may help to define the emerging limits to arbitration for sports governing bodies in the U.S. and elsewhere.

Empirically Investigating the Source of the Repeat Player Effect in Consumer Arbitration

Policymakers, courts, and scholars have long been interested in whether repeat players enjoy an advantage in forced arbitration. Sophisticated empirical studies of consumer and employment awards reveal that there is indeed a repeat player effect: even controlling for other factors, companies that arbitrate more than once boast higher win rates than one-shot firms. However, researchers have not yet tried to determine whether this repeat player effect is a product of experience within the arbitral forum (the “experience” hypothesis) or characteristics of the repeat playing companies themselves (the “defendant-specific” hypothesis). This Article begins to address this issue by analyzing 4,570 consumer arbitration awards from the American Arbitration Association. Using a unique regression specification that includes both discrete and continuous random variables (a combination of functional forms not used in previous literature), it finds that the repeat player effect is more consistent with the defendant-specific hypothesis than it is with the experience hypothesis. Indeed, to the extent that repeat-playing businesses enjoy an advantage in arbitration, it likely emanates from company-specific characteristics.

The Supreme Court's Landmark Decision in New Prime Inc. v. Oliveira: A Panoptic View of America's Civil Justice System and Arbitration

On the surface, the 2019 U.S. Supreme Court case of New Prime Inc. v. Oliveira involves the trucking industry and a narrow issue of arbitration law. But on a deeper level, this case raises fundamental questions about America’s civil justice system and how our society should resolve disputes. This article examines the New Prime decision from past, present, and future points of view. From the perspective of the past, the New Prime case stands apart as representing the first decision in several decades where the Supreme Court has ruled in favor of workers and rejected an expansive interpretation of the Federal Arbitration Act. Viewed from a present perspective, New Prime can also be viewed as part of the larger sociopolitical environment in which it was issued. There has been a recent, developing backlash against the widespread use of forced arbitration in America, along with bipartisan support for legislative reforms as well as some private initiatives to cut back on the use of arbitration. Also, the contentious confirmation hearings of Justice Brett Kavanaugh and President Donald J. Trump’s attacks on the judiciary have raised questions about partisanship and the independence of the judiciary. The unanimous New Prime decision and its curtailment of arbitration arguably reflect the particular environment in which it was issued. Finally, looking ahead to the future, the New Prime case can solve some problems involving the FAA and raise several others. The Court’s analysis in New Prime suggests a new judicial approach that can be used to fix the legal framework for arbitration. New Prime also raises larger questions about the scope of the FAA and which workers are exempt from its coverage, and workers in the gig economy, such as Uber and Lyft drivers, could be impacted and no longer forced to arbitrate.

A New Strategy for Regulating Arbitration

Confidential arbitration is a standard precondition to employment. But confidential arbitration prevents a State from ensuring or even knowing whether employees’ economic, civil, and due process rights are respected. Further, employers regularly require employees to waive rights to class proceedings (thereby foreclosing small claims) and to arbitrate under the laws of another jurisdiction (thereby evading mandatory state law). In response, States have tried to regulate arbitration provisions, arbitral awards, and arbitral processes. But these efforts have all failed because the Supreme Court says they are preempted by the Federal Arbitration Act. In this Article, I argue that States can and should adopt a new strategy: Deter parties from forming such contracts in the first place. The Article proceeds in three parts. First, I explain the problem. Over the last fifty years, the Supreme Court systematically immunized arbitration provisions against every plausible contract defense. Yet the Supreme Court continues to insist that, just as the Federal Arbitration Act requires, arbitration agreements are still subject to “generally applicable contract defenses, such as fraud, duress, or unconscionability.” This is false. Second, I present the first large-scale evidence on the pervasiveness of arbitration. The Supreme Court’s arbitration precedents have effect only to the extent private parties agree to arbitrate their disputes. To study this, I use machine-learning protocols to parse millions of filings with the Securities and Exchange Commission and create a database of nearly 800,000 contracts formed by public companies. These contracts include employment agreements, credit agreements, joint ventures, purchases, and others. Employment contracts are by far the most likely to include a mandatory arbitration provision. Finally, I argue that, because the Supreme Court has all but stripped States of their power to enforce contracts, States should adopt policies that deter formation of objectionable contracts. For example, States cannot prohibit forced arbitration of sexual harassment claims. They can, however, prohibit sexual harassment as a subject matter for employment contracts; they can also enforce this with civil penalties and whistleblower rewards. Similarly, States cannot stop an employer from arbitrating under the laws of another jurisdiction, thereby evading mandatory limits on noncompete agreements. But States can declare noncompetes illegal, levy civil fines on employers that form them, and again offer employees whistleblower rewards to report violations. These approaches work because they create a cause of action for a third party - the State - who is not subject to the arbitration agreement. And unlike past efforts, these laws would not be preempted because they do not “derive their meaning from the fact that an agreement to arbitrate is at issue.”

Evolution of the Arbitration Forum as a Response to Mandatory Arbitration

Decades of Supreme Court decisions elevating the Federal Arbitration Act (FAA) have led to an explosion of mandatory arbitration in the United States. A form of dispute resolution once used primarily between merchants and businesses to resolve their disputes, arbitration has expanded to myriad sectors, such as consumer and service disputes, investor disputes, employment and civil rights disputes. This article explores this expansion to such non-traditional contexts and argues that this shift requires the arbitral forum to evolve to increase protections for forced participants and millions of potential claims that involve matters of public policy. By way of example, decades of forced arbitration of securities disputes has led to increased due process and procedural reforms, even as concerns remain about investor access, the lack of transparency and investors’ perception of fairness.

Regulating Forced Arbitration in Consumer Financial Services: Re-Opening the Courthouse Doors to Victimized Consumers

Forced arbitration clauses have become almost unavoidable in contracts for financial services and products ranging form credit cards to private student loans. This report examines how the financial services industry uses these clauses to defeat consumers' rights and evade accountability for their wrongdoing.As the report explains, the forced arbitration process harms consumers by relegating them from the civil justice system to an inferior forum for vindicating their rights. In contrast to the courts, forced arbitration tends to be secretive, less independent of industry, more prone to erroneous and arbitrary rulings, more likely to discourage the pursuit of claims with procedural barriers, and more likely to provide inadequate relief for compensating victims of corporate wrongdoing.The report examines the 2016 proposal by the Consumer Financial Protection Bureau (CFPB) to limit the use of forced arbitration clauses in contracts for financial services and products, and finds that the proposal is consistent with the agency's statutory obligation to protect consumers. The report goes on to explain that the CFPB would better fulfill its statutory mandate by revising its proposal to include stronger protections for consumers.

ESTABLISHMENT AND DEVELOPMENT OF JUDICIAL PROCEEDINGS CONCERNING ISSUANCE OF EXECUTIVE LETTERS FOR THE DECISIONS OF COURT OF ARBITRATION

The article is devoted to the establishment and historical development of arbitral proceedings as well as to the mechanism of arbitration decisions performance. Also, the author researched how the regulation of arbitration decisions performance varied throughout different historical periods in Ukraine; and, consequently, the abovementioned historical periods were classified according to the specific characteristics of regulation concerning arbitration decisions performance. It appears that the process of development of arbitral proceedings and arbitration decisions performance consists of the following periods: 1. Origination. This stage took place in the Princes Age when courts activity was a combination of state and arbitral proceedings. Meanwhile, any state bodies did not interfere with arbitration decisions performance and, even more, this performance had to be done only by case parties. 2. Establishment – the stage which started when Ukraine fell under the Lithuanian administration. For the first time in history arbitral proceedings were officially regulated and this was a remarkable moment because state bodies began to have impact on these organizations. For example, case parties were granted with a legally based opportunity to use state «help» in forced arbitration decisions performance. 3. Constant development. During this stage the Civil Proceeding Regulations were adopted as well as judicial systems in Russia and Austria were reformed in 1864 and 1895 respectively. Also, state bodies regulated all aspects of arbitral activity, including arbitral courts cooperation with state courts. It should be mentioned that the basis of this cooperation was the principle of agreement and autonomic nature of arbitral proceedings. 4. Decline. This period started at the beginning of the Soviet epoch in the Ukrainian history. Due to the total control of state courts, arbitral courts de-facto ceased their existence as the separated institute. 5. Restoration or the modern period of arbitral proceedings development. It began with proclaiming independence of Ukraine and continued with updating legislation on arbitral proceedings, e. g. the adoption of Law of Ukraine «On arbitral courts».

The Fall and Rise of the Antitrust Class Action

Antitrust class actions have narrowed significantly in the United States in recent years but still remain robust compared to aggregate litigation in the rest of the world. While the Supreme Court continues to narrow the doorway to class actions, the rest of the world is increasingly interested in creating new mechanisms for aggregate litigation to better support effective private damage litigation in competition cases, and in particular the large number of small claims cases that led to the class action boom in the United States in the first place. The challenge for the rest of the world will be to fashion new remedies consistent with the history, culture, substantive law, and procedural rules of their legal traditions rather than either adopt or reject the system that has evolved in the United States. This article provides an overview of the increasingly stringent requirements for antitrust class actions in the United States and provides a representative survey of the nascent movement toward collective actions abroad where competition cases have been at the forefront of the debate. Part I discusses the standards for class certification under Rule 23 and recent Supreme Court cases tightening those standards. Part II analyzes a separate line of Supreme Court cases which effectively eliminates class actions altogether when parties have entered into a contract requiring arbitration rather than litigation and further requires individual rather than collective arbitration proceedings.Part III continues with a survey of recent developments in the opposite direction outside the United States. This section examines ongoing changes in the EU, UK, other EU Member States, Mexico, and Canada to empower consumers and business with small claims in competition cases by creating collection action mechanisms of different types. This section also briefly discusses the decision of the EU to simply prohibit the type of forced arbitration clauses that the U.S. Supreme actively encourages. Part IV analyzes the critical aspect of whether foreign class actions will thrive or whither on the vine – the need for an opt-out mechanism rather than the opt-in mechanism favored in most jurisdictions outside the U.S. Finally, I conclude by pointing out the irony of the rest of the world struggling to figure out how best to empower plaintiffs to bring appropriate class action type proceedings while the U.S. Supreme Court remains principally concerned with how to restrain or eliminate the very same type of action.

The Compatibility of Forced CAS Arbitration with EU Competition Law: Pechstein Reloaded

In its Pechstein ruling, the Oberlandesgericht (OLG) Munchen based itself on German antitrust law to challenge the validity of arbitration clauses in favour of the Court of Arbitration for Sport (CAS), which are commonly used across the sporting world. Interestingly, competition law was used to indirectly secure a fundamental right enshrined in Article 6 of the European Convention of Human Rights: the right to a fair trial. In this paper we analyse whether the OLG could have come to a similar result based on Article 102 TFEU, the EU competition law provision prohibiting the abuse of a dominant position. If the reasoning used by the OLG can be transposed to EU competition law, this would have even more significant consequences for the future of the CAS. The finding of a violation of Article 102 TFEU would give the case a supranational scope and open the door for follow-on damage claims by athletes in all EU Member States.The paper is structured as follows. The first part elucidates the legal underpinnings of the jurisdiction of the CAS and explicates the forced nature of CAS arbitration. The second part examines whether the imposition of forced CAS arbitration clauses by sports governing bodies may constitute an exploitative abuse of a dominant position under Article 102 TFEU. It will be argued that the answer to this question ultimately depends on the independence of the CAS. The third part, subsequently, scrutinizes whether the CAS fulfils this fundamental requirement. Finally, conclusions are drawn about the challenges ahead for the CAS in the aftermath of the Pechstein case.

Stacked Deck: A Statistical Analysis of Forced Arbitration

'Stacked Deck' is a statistical analysis of outcomes in forced arbitration, also called mandatory arbitration or binding mandatory arbitration, that finds: 1) Individual arbitrators have a strong incentive to favor the firms that provide them with repeat business over an individual consumer they may never see again. 2) Companies win a favorable ruling in arbitration far more often than consumers. 3) Companies involved in the most arbitration cases - and therefore in creating the most business for arbitrators - consistently receive more favorable rulings than firms involved in fewer cases. Almost all credit card, auto, and small consumer product contracts contain a hidden forced arbitration clause instead of offering consumers their day in court before a jury of their peers.