Posted Aug 06, 2007 06:42 pm CDT
Two Democratic lawmakers have introduced legislation that would bar enforcement of some mandatory arbitration agreements.
The Arbitration Fairness Act would bar mandatory arbitration agreements involving employment, consumer rights, franchises or civil rights, according to a press release. Agreements to arbitrate in these areas could be made after a dispute arises, but not before. The law is designed to prevent consumers from being forced into arbitration.
One of the sponsors, Sen. Russ Feingold, D-Wis., says mandatory arbitration is being used “to deprive ordinary citizens in employment, consumer, and franchise disputes of their constitutional right to use the civil justice system.”
The other sponsor, U.S. Rep. Hank Johnson. D-Ga., told Financial Week that mandatory arbitration of investor disputes has become an “albatross” for investors.
Some mandatory arbitration critics say the need for legislation is more acute following the consolidation of the security industry’s arbitration forums, the Wall Street Journal (sub. req.) reports.