Enter to open, tab to navigate, enter to select
US Congressmen introduce Arbitration Fairness Act 2011
Practical Law Legal Update 7-506-3098 (Approx. 3 pages)
US Congressmen introduce Arbitration Fairness Act 2011
| Published on 02 Jun 2011 • International, USA (National/Federal) |
Abby Cohen Smutny (Partner) and Lee A. Steven (Counsel), Leah Witters (Associate), White & Case LLP
In response to the Supreme Court’s decision in AT&T Mobility v Concepcion (see Legal update, Supreme Court holds that Federal Arbitration Act preempts California State rule on unconscionability: full update), US Congressmen have introduced the Arbitration Fairness Act 2011, which is intended to amend the Federal Arbitration Act (FAA) to prohibit enforcement of certain mandatory pre-dispute arbitration agreements.
In its findings section, the proposed legislation explains that a "series of decisions by the Supreme Court of the United States have changed the meaning of the Act so that it now extends to consumer disputes and employment disputes."
To limit courts' application of the FAA, the proposed legislation would add a new chapter, which provides that "no pre-dispute arbitration agreement shall be valid or enforceable if it requires arbitration of an employment dispute, consumer dispute, or civil rights dispute."
Given the widespread use of arbitration agreements in employment and consumer contracts, this proposed legislation, if passed, would greatly alter the types of disputes that are settled by arbitration. Similar legislation, however, was introduced in a previous Congress and was not enacted.