Thanks to tort reform, arbitrations instead of courtroom hearings are becoming more common. Whether buying a car, getting a credit card, or signing up for cellphone service, consumers increasingly are asked to sign an agreement that requires them to go to arbitration rather than sue in the event of a dispute. Franchisees and vendors for large corporations, too, encounter similar agreements.
Proponents say mandatory arbitration is quicker and cheaper than going to court. But critics contend the process isn’t always fair.


courtroom.jpgMany Americans would be surprised to learn they are barred from pursuing a case in court because of boilerplate binding arbitration clauses buried in forms they signed with banks, real estate and escrow companies, auto dealerships, medical care providers (including hospitals) and many other people and entities that may have caused them harm. Yet that’s often the case (and what happened to the two Halliburton employees would have been the same, even if they’d been in Wisconsin rather than Iraq).
Arbitration has been promoted as “faster and cheaper.” But in arbitration proceedings, there is no public or media access, no rules of evidence or procedure, no court transcript, no jury and, most important, no appeal — no matter what the decision of the arbiter. And perhaps most troubling is the nature of the system, corporations and businesses are the “repeat clients” for arbitration groups and thus can provide a steady source of business if the arbitration group demonstrates “business-friendly” decisions.
Binding arbitration clauses were drafted and put into form contracts by lawyers for the corporations that stood to benefit from them the most. In an arbitration, the dispute is heard by an arbitrator or a panel of arbitrators who render a binding decision that can’t be appealed. In arbitration consumers often can’t have legal representation and have no ability to learn facts that would help prove their case, while most corporations have their own attorneys. Plus, it claims arbitrations rarely are cheaper than civil court for consumers.
Events in a federal district court in Texas last month demonstrate the pervasiveness and inherent unfairness of mandatory arbitration. A young American woman already denied the right to criminal justice in Iraq was insulted for a second time when a judge denied her the right to sue for civil relief in a U.S. court.
There was a binding arbitration clause in her employment contract. The judge said: “Sadly, sexual harassment, up to and including sexual assault, is a reality in today’s workplace.” He then sent the case to binding arbitration as requested by Halliburton and its former subsidiary, KBR, snuffing out the civil case of their employee, a mother of five who had filed a lawsuit alleging sexual harassment and assault by male co-workers while on the job in Iraq.
A second woman is likely to face the same fate in the same court, in a case alleging that she was drugged and brutally gang-raped by co-workers in Iraq and then held incommunicado, without food or water, in a shipping container by the same employer. In an unbelievable statement to the Equal Employment Opportunity Commission, KBR said that after a medical examination, the woman was “taken to a secure unlisted living container where she could rest.” It is hard to imagine any greater trauma to an already traumatized and injured rape victim than terrifying and forcible isolation immediately after the violent event. Adding insult to injury, the rape kit used by a military doctor in examining the victim was reportedly handed over to Halliburton/KBR, and doctor’s notes and photos of her bruises are missing.
There was no criminal prosecution of the alleged perpetrators because they worked for a defense contractor, which is exempt from criminal sanctions under an order enacted by the Coalition Provisional Authority in Iraq during L. Paul Bremer III’s tenure as its administrator.
And now the Texas court ruling appears to say that because of the arbitration clause, these women have no standing in a U.S. civil court either.
Federal legislation was introduced last summer to make pre-dispute mandatory arbitration agreements unenforceable. The bill hasn’t gotten beyond subcommittee hearings, however.

Categories: Legal Myths
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