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The Downside of Binding/Mandatory Arbitration
1. Why Mandatory Binding Arbitration is Bad for Injury Victims
Oregon drivers who have been injured by other negligent road users have always had the right to
consult 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 have
treated 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 to
have cases settled through a system known as binding arbitration.
Rather than streamlining the process and speeding up the settlement of claims, which is the slant
being placed on the issue of binding arbitration by the insurance companies, opponents say it’s
really about saving money and increasing corporate profits by taking away a consumer's right to get
justice through the courts.
How binding arbitration works
“Mandatory binding arbitration” means both sides to a potential dispute supposedly agree to allow a
third party arbitrator (or a panel of arbitrators) resolve a dispute. This would remove a jury and/or
judge from the process completely. Instead, the arbitrator—who is not required to have any legal
training whatever, and who is not even required to follow the rule of law—makes a final decision on
the 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 personal
injury 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 most
people don’t even know they’ve signed such a clause. The “mandatory” element means people are
actually compelled to go to arbitration before the dispute has even arisen. What’s more, entire
industries are now inserting mandatory arbitration clauses into their standard contracts, so to say
that people have voluntarily agreed to binding arbitration is not exactly accurate.
You’ve probably agreed to binding arbitration without even knowing it
Mandatory 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. agreement. However, in spite of not knowing of your agreement to binding arbitration, you might
have 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 corporation
Arbitrators are not chosen by the plaintiff
Binding 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 being
made. What’s more, the business is virtually always allowed to select the arbitrator, never the
victim. Without question, this creates a quite natural bias on the part of the arbitrators to rule in the
most favorable way to the people who are paying them. They are naturally inclined to side with
corporations that will give them more cases and generate repeat business and a consistent income
stream.
Even if multiple arbitrators are available, companies who are frequently in dispute will know from
experience how a particular arbitrator is likely to rule in a specific type of case. They will therefore
know 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 the
contrary, these cases can take years to be heard. What’s more, clauses are often inserted that say
hearings must be held in locations large distances from the claimant’s residence. Then there are the
costs. Portland personal injury lawyers take cases on a contingency basis, whereby victims pay
absolutely nothing unless their case is won. With binding arbitration, victims pay nothing up front
but 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 ongoing
treatment, who may have lost significant income through missing work, have had their families
already disrupted and are in ongoing pain or are even disabled can find attending these arbitration
hearings even more punitive than what they’ve already been through. And they’re the victims!
3. What makes the case against mandatory binding arbitration even stronger is the possibly surprising
fact 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 when
dealing with each other, but prefer binding arbitration when dealing with individuals! This may
explain why a recent study showed telecommunications and financial companies have binding
arbitration clauses built into 75 percent of their consumer contracts, but fewer than 10 percent of
inter-company contracts.
Oregon auto insurance companies may want to insert mandatory binding arbitration into their
policies, but Portland personal injury lawyers are warning consumers to be very wary of entering
such agreements. The only real advantages to binding arbitration lie with the companies, not the
injured individuals. The best way for an accident victim to get true justice and fair compensation is to
have an experienced and reputable team of Portland personal injury lawyers take their case. The
insurance companies won’t want to go to court because they know the injured party is far more
likely to receive a fairer hearing and greater compensation than if they go to binding arbitration.