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Binding arbitration when there is a significant power imbalance should be illegal. If it's between two similarly abled parties (e.g. two individuals), it should
by BeetleB 28d ago
Binding arbitration when there is a significant power imbalance should be illegal. If it's between two similarly abled parties (e.g. two individuals), it should be fine.
I studied a bit of this in a university course. Between a lot of organizations, binding arbitration is more efficient (i.e. cheaper) than the legal system. If your company wants to make a deal with another company, binding arbitration often makes sense.
Ditto for 2 individuals: If they had to go through the legal system, it could end up being a war of attrition - the one who has more money to pay lawyers wins. Binding arbitration is a way to "level" that field.
The down side (at least in many, if not all, states) is that you have little recourse if the arbiter is totally unfair. With the legal system, you can appeal, etc.
But between an individual and a large company - no way!
In my last job, the (very big) company automatically enrolls new employees into a binding arbitration agreement, but they do give a timeline to opt out. I was surprised I had that option. I even paid a lawyer to review the docs. He said "Yep, you can (and should) opt out. I'm surprised they even gave you that option."
- braiamp 28d agoBinding arbitration shouldn't be a thing. If we want to go to arbitration is because we are in the same level of negotiation. One side imposing arbitration or any other kind of restriction on the mechanism that the individual or organization has to redress issues shouldn't be a thing
- BeetleB 28d agoThe counterargument is that if you don't have binding arbitration, you can be constantly worried that the other party will drive you bankrupt with frivolous legal proceedings, and that fear discourages collaboration. A binding arbitration puts that fear at ease.
- LocalH 28d agoBanning binding arbitration means that class actions can happen.
- BeetleB 28d agoThat's irrelevant to the point I'm making. Class action is, almost by definition, a case where there is unequal power.
- AngryData 27d agoTo me that is a flaw in the justice system that needs to be resolved by legislation and within the justice system, not something that should have some bs extralegal work around.
- pwdisswordfishq 22d agoAh, yes, "fixing" the broken American rule for attorneys' fees by corrupting the justice system even further.
- casey2 26d agoWe have a legal system precisely because it's inefficient. Rather than arbitration lets just not have any laws, functionally equivalent and cheaper. Having no enforcement would be cheaper too. What makes arbitration preferable is whatever meaningful protection it provides. So what protections does it give consumers in this case, and why are those adequate? "It's more efficient" doesn't answer that. There are practical limits to the number of individual claims Sony can lose. Of course if it's within their rights Sony would very much want to steal ~$1,000 from everyone that uses their services. This all assumes that the arbitrator isn't getting kickbacks which they are more likely to than the traditional legal system.