Bill Introduced to Stop Pre-dispute Arbitration for Consumers and Small Businesses

The Restoring Statutory Rights Act of 2016, sponsored by Democratic Senator Patrick Leahy, was sent to congressional committee on February 4, 2016 for consideration. The proposed legislation declares that the FAA “did not, and should not have been interpreted to, supplant or nullify the legislatively created rights and remedies which Congress . . . has granted to the people of the United States for resolving disputes in State and Federal courts.” It would amend Section 2 of the FAA to provide an exception to enforcement of a provision that “requires arbitration of a claim for damages or injunctive relief brought by an individual or Small Business . . . arising from the alleged violation of a Federal or State statute, the Constitution of the United States, or a constitution of a State, unless the written agreement to arbitrate is entered into by both parties after the claim has arisen and pertains solely to an existing claim.” The law would also clarify that grounds to revoke an arbitration agreement exist where the agreement is contrary to state law. The determination of whether an agreement to arbitrate is valid would be left to the court, rather than the arbitrator — “irrespective of whether the party resisting arbitration challenges the agreement to arbitrate specifically or in conjunction with other terms of the contract containing such agreement.”