'Unfair' Arbitration Clauses

Illinois Law Review, 2001

Posted: 15 Dec 2000

Abstract

The article reexamines the most common academic criticisms of "mandatory" arbitration of consumer disputes. First, it presents the results of an empirical study of "unfair" arbitration clauses, based on a sample of dispute resolution clauses in franchise agreements. The study finds that while some provisions identified by arbitration critics as unfair are common in the sample, others (such as clauses providing for biased arbitrators) are very rare. Second, it describes plausible circumstances under which both parties to pre-dispute arbitration clauses -- even clauses containing "unfair" provisions -- will be made better off by arbitration. Third, it argues that business reputation and arbitration institutions may constrain corporate opportunism in the use of pre-dispute arbitration agreements. Accordingly, increased government regulation of arbitration may be unnecessary, or at least more limited than some have proposed.

Keywords: arbitration, consumer arbitration, mandatory arbitration, dispute resolution, franchising

JEL Classification: K12, K40, K41

Suggested Citation

Drahozal, Christopher R., 'Unfair' Arbitration Clauses. Illinois Law Review, 2001. Available at SSRN: https://ssrn.com/abstract=250167

Christopher R. Drahozal (Contact Author)

University of Kansas School of Law ( email )

Green Hall
1535 W. 15th Street
Lawrence, KS 66045-7577
United States
785-864-9239 (Phone)
785-864-5054 (Fax)

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