The arbitration firm JAMS posted a piece this week recognizing the 100th anniversary of the Federal Arbitration Act (FAA). Indeed, Congress passed the FAA in Feb. 1925 to facilitate resolution of business to business disputes, validating the ability of commercial parties of relatively equal bargaining power to agree in their contracts to resolve their disputes in arbitration. Decades later, the U.S. Supreme Court extended the FAA’s reach to adhesion contracts between corporations and consumers. So today, it’s common practice for large companies to insert clauses in their nonnegotiable terms and conditions to force consumers with legal claims out of court and into private arbitration. Private arbitration providers (and companies inserting these provisions) are the obvious beneficiaries of SCOTUS’ interpretation. So while consumer protections and our constitutional right to a civil jury trial deteriorate under today’s FAA, it’s clear why JAMS is celebrating its existence.
