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If you did that, the arbitration decision would get vacated by a court. You can't just choose any arbitrator willy-nilly who will always rule for you. That's ju

If you did that, the arbitration decision would get vacated by a court. You can't just choose any arbitrator willy-nilly who will always rule for you. That's just not how this works. Here's a decent-looking article going through some of the bases for getting a court to overturn an arbitration decision: https://www.floridabar.org/news/tfb-journal/?durl=%2FDIVCOM%2FJN%2Fjnjournal01.nsf%2FArticles%2FF2A3DA279CD3A5C485257F45004E49E3 https://www.floridabar.org/news/tfb-journal/?durl=%2FDIVCOM%... As for why not change the law to let parties choose at the time of the dispute, what you prefer ex ante and ex post is rather different. Ahead of time, you don't know who will be the one claiming wrongdoing of the other, so you'll be willing to agree to binding arbitration. After all, most people go into a deal intending to abide by it, and everyone goes into a deal at least trying to convince the other side of that. But after the fact, the party likely in the wrong would prefer to impose the high cost of litigation on the one likely not in the wrong. It can then unfairly capture a portion of this potential cost by proposing a settlement. An example with made-up numbers: say you owe me $20,000 and refuse to pay and that it would cost me $5,000 in court and attorney's fees to sue you in court for it. You could offer me a settlement of $16,000 and it would be irrational for me to decline it, as it would leave me better off than winning the lawsuit (and I might not win). Now you have unfairly but legally taken $4,000 from me. If there was an arbitration option at the time of dispute, providing for a process that would only cost me $1,000, you would never accept it. Why would you? It has to be binding and agreed to before the dispute arises for it to work.

chii 8y ago
For the 16000 settlement case, wouldn't the courts award both the legal cost plus damages incurred, so as long as you win, you'd be ahead?
- marcoperaza 8y ago
  Attorney’s fees are not awarded in the US. With a few exceptions, each side pays for their own lawyers.
  - namibj 8y ago
    Which is why you even get such big problems like patent trolls and anti-SLAPP....
dd36 8y ago
Arbitration is way more expensive than court. The up front fees to a business are $3,400 for AAA. Sometimes more. This does provide an incentive for a business to settle a small dollar claim quickly.
- marcoperaza 8y ago
  Arbitration is much faster though, which means less attorney’s fees. That is where the cost really is.
  - dd36 8y ago
    Not in my experience. It took 7 months for the AAA to appoint an arbitrator. And, often the companies refuse to pay the upfront fees, which drags things out. See Uber.
mindslight 8y ago
Yes, I did acknowledge the possibility of long tail costs being higher. A case of money being owed should be relatively simple to substantiate, and if the amount is that well defined, then I'd think attorney's fees would be awarded when the other side didn't accept your offer to take $20k and insisted on litigation. But obviously many types of contracts would love to write "you cannot sue us for any reason whatsoever", and yet this is not allowed - even though it would make a lot of sense for many things like no-economic-consideration software licenses (rather than that whole NO WARRANTY rigmarole). The main problem, as I focused on, is malinterpretation. My example had to be very unsubtle to be understood, which is the norm in software land. But yes my contrived example would not pass the smell test in legal land and would thus be easily contested. So now we get to argue about the epsilon. Directly from the article you linked: > Crucially, these grounds do not include substantive review of the award for "mere" errors of law or fact. As a result, "judicial review of arbitration decisions is among the narrowest known to the law." It seems like one would likely have to show an overt conspiracy with the arbitrator or other gross arbitrary behavior to contest a decision. Given how much corruption is based on cooperative wink-wink, and that the contract drafter/arbitrator purchaser is likely to be the repeat customer, it's a bad setup. Also directly from that article: > Before the enactment of the Federal Arbitration Act (FAA) and its Florida counterpart, the Florida Arbitration Code (FAC), courts were generally hostile to arbitration, viewing it as "an attempt to oust courts of [their] lawful jurisdiction." So yes, it seems that the courts even agree with me. Then the arbitration industry got the ear of lawmakers, who proceeded to undermine the courts. Don't get me wrong - philosophically I would very much like to reduce court costs and lawyer overhead. Stripping away the right to sue through contracts of adhesion is not the way to go about that though.

chii 8y ago

For the 16000 settlement case, wouldn't the courts award both the legal cost plus damages incurred, so as long as you win, you'd be ahead?

marcoperaza 8y ago
Attorney’s fees are not awarded in the US. With a few exceptions, each side pays for their own lawyers.
- namibj 8y ago
  Which is why you even get such big problems like patent trolls and anti-SLAPP....

dd36 8y ago

Arbitration is way more expensive than court. The up front fees to a business are $3,400 for AAA. Sometimes more. This does provide an incentive for a business to settle a small dollar claim quickly.

marcoperaza 8y ago
Arbitration is much faster though, which means less attorney’s fees. That is where the cost really is.
- dd36 8y ago
  Not in my experience. It took 7 months for the AAA to appoint an arbitrator. And, often the companies refuse to pay the upfront fees, which drags things out. See Uber.

mindslight 8y ago

Yes, I did acknowledge the possibility of long tail costs being higher. A case of money being owed should be relatively simple to substantiate, and if the amount is that well defined, then I'd think attorney's fees would be awarded when the other side didn't accept your offer to take $20k and insisted on litigation. But obviously many types of contracts would love to write "you cannot sue us for any reason whatsoever", and yet this is not allowed - even though it would make a lot of sense for many things like no-economic-consideration software licenses (rather than that whole NO WARRANTY rigmarole). The main problem, as I focused on, is malinterpretation. My example had to be very unsubtle to be understood, which is the norm in software land. But yes my contrived example would not pass the smell test in legal land and would thus be easily contested. So now we get to argue about the epsilon. Directly from the article you linked: > Crucially, these grounds do not include substantive review of the award for "mere" errors of law or fact. As a result, "judicial review of arbitration decisions is among the narrowest known to the law." It seems like one would likely have to show an overt conspiracy with the arbitrator or other gross arbitrary behavior to contest a decision. Given how much corruption is based on cooperative wink-wink, and that the contract drafter/arbitrator purchaser is likely to be the repeat customer, it's a bad setup. Also directly from that article: > Before the enactment of the Federal Arbitration Act (FAA) and its Florida counterpart, the Florida Arbitration Code (FAC), courts were generally hostile to arbitration, viewing it as "an attempt to oust courts of [their] lawful jurisdiction." So yes, it seems that the courts even agree with me. Then the arbitration industry got the ear of lawmakers, who proceeded to undermine the courts. Don't get me wrong - philosophically I would very much like to reduce court costs and lawyer overhead. Stripping away the right to sue through contracts of adhesion is not the way to go about that though.