WR has joined the U.S. Chamber of Commerce and a coalition of organizations in voicing strong opposition to several bills in the 118th Congress to prohibit arbitration and class action waiver provisions. Arbitration, an efficient and cost-effective dispute resolution mechanism since the Federal Arbitration Act of 1925, is under threat from efforts to replace it with the flawed class action litigation system.
Empirical evidence supports the effectiveness of arbitration. Studies indicate that claimants in arbitration often achieve better results than in court. By comparison, class action settlements often yield minimal or no compensation for class members while attorneys amass substantial fees.
Critics of arbitration often misrepresent it as unfair. However, arbitration providers and courts ensure that arbitration operates fairly and that agreements are only enforced if they meet basic guarantees of fairness and due process. This is supported by the American Arbitration Association (AAA), the nation’s largest arbitration provider, which has developed fairness rules for employment and consumer arbitrations.
Despite the lack of evidence showing systemic problems with arbitration, the 118th Congress has seen the introduction of multiple bills and amendments that attack the availability of arbitration and class action waivers in numerous contexts. If these legislative efforts succeed, they could render unenforceable potentially millions of arbitration provisions that currently allow for the orderly and economical resolution of disputes.
These attacks on arbitration are inaccurate and unnecessary. They threaten an important alternative to litigation that has benefited consumers, employees, and businesses for decades. WR strongly recommends that attempts to prohibit arbitration or class action waivers be opposed. The only real beneficiaries of these anti-arbitration provisions will be class action lawyers who stand to gain from the potential increase in class action lawsuits, which often enrich them while providing little benefit to class members.