Abstract
The benefits of arbitration as a form of alternative dispute resolution in business to business disputes, particularly international business to business disputes, are well recognized and will be discussed in this article. Concerns arise, however, where arbitration is sought to be imposed as a method of dispute resolution upon consumers, through the inclusion of arbitration clauses in consumer contracts. Whilst there is a body of literature which argues strongly against the enforceability of arbitration clauses in consumer contracts, there is little consideration in the literature as to the possible benefits of consumer arbitration which might warrant enforceability within particular regulatory boundaries. To date, the pro-arbitration stance taken by some commentators and courts is premised on freedom of contract arguments rather than consumer benefit. This article will explore whether it is possible to overcome a number of the current concerns regarding the use and enforcement of consumer arbitration clauses through constructing a regulatory framework which will give rise to a fair alternative dispute resolution mechanism for consumers. The article will begin by exploring the current context which includes limitations upon the arbitrability of consumer disputes in a number of jurisdictions. It will then go on to consider what might be the benefits of facilitating consumer arbitration as a mechanism for alternative dispute resolution, particularly in the context of international consumer disputes. The article will then outline a range of concerns regarding the perceived unfairness of consumer arbitration and will draw upon current and potential regulatory models to consider ways of addressing those concerns. The article will conclude with recommendations for a regulatory model designed to facilitate fair consumer arbitration.
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Notes
See for example AT&T Mobility v Concepcion 131 S Ct 1740 (2011); and American Express Co v Italian Colors Restaurant 133 S Ct 2304 (2013).
P.L. 90–321, 82 Stat.146.
Dell Computer Coorp v Union des Consommateurs [2007] 2 S.C.R. 801, 2007 SCC 34 (Supreme Court of Canada, 13 July 2007).
Article 3.1.
Article 1 (q).
Section 6 Swedish Arbitration Act 1999.
See Section 91 Arbitration Act 1996 (UK); Section 1031(3) German Civil Procedure Law.
See also discussion in the Australian Government Productivity Commission report 2014 regarding the need for “alternative mechanisms to improve equity and access to justice and achieve lower cost civil dispute resolution” (at p. 5).
Business to Consumer.
For an example of a strict and narrow application of the unconscionability doctrine see the Australian High Court decision in Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd and Others (2003) 197 ALR 153; [2003] HCA 18.
See for example the decision in Subway Systems Australia Pty Ltd v Aaron Ireland and Lynette Ireland [2014] VCSA (Victorian Court of Appeal decision- judgement delivered 1 July 2014) where the court considered that “court” in article 8 of the UNCITRAL Model Law as adopted into the Australian State-based Commercial Arbitration Acts and the Australian International Arbitration Act 1974, included the Victorian Civil and Administrative Tribunal. Note that the Victorian government has set up a consultation on the definition of “court” in the Commercial Arbitration Acts, and has received submissions on the point, including a submission from the Law Council of Australia that section 8 of the Commercial Arbitration Act 2011 (Vic) should be amended to specifically include tribunals such as small claims tribunals as being amongst the entities required by section 8 to enforce arbitration agreements. For the reasons expressed in the body of this article, the author would regard this as an unfortunate outcome.
18 financial service providers failed to comply with FOS determination between 1 January 2010 and 1 January 2014: http://www.fos.org.au/the-circular-special-issue-april-2014/fos-forum/unpaid-determinations/
Consider for example a clause suggested by the Institute of Arbitrators and Mediators Australia for use in industry members’ consumer contracts: “Any dispute under, or arising out of, this contract shall be referred to the Institute of Arbitrators and Mediators Australia, for resolution under the Rules of the (Trade Body or Association) Consumer/Industry Dispute Resolution Scheme. Each case will first be referred to a Conciliator appointed by the Institute unless either party wishes to proceed directly to arbitration. If the conciliation is not satisfactorily concluded within 6 weeks or if the parties want to proceed directly to arbitration, the Institute will appoint an Arbitrator who will make a final and binding award.”
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The author wishes to sincerely thank the anonymous reviewers for the extremely detailed and helpful feedback and suggestions.
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Wilson, T. Setting Boundaries Rather than Imposing Bans: Is it Possible to Regulate Consumer Arbitration Clauses to Achieve Fairness for Consumers?. J Consum Policy 39, 349–364 (2016). https://doi.org/10.1007/s10603-016-9322-z
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DOI: https://doi.org/10.1007/s10603-016-9322-z