Bankruptcy In Florida: What is Arbitration?
By Carmen Dellutri, Attorney at Law on Oct 19, 2007 in General Bankruptcy Information
What is Arbitration, and why do I have to worry about it in Bankruptcy Court. In a series of blogs to follow, we will discuss arbitration provisions and why consumer debtors need to be concerned about these provisions. Simply put, Arbitration is an alternative dispute resolution mechanism. Many of the contracts entered into today by consumers contain pre-dispute arbitration agreements. A pre-dispute arbitration agreement refers to a provision in the contract that you and the creditor agree to in advance of any disputes.Becuase almost all consumer contracts now have some form of pre-dispute arbitration provision, and the provision is non-negotiable, this provision of the contract will become important in the event that one party breaches the contract. Any claims that arise will be subject to arbitration rather than a lawsuit. It is important to note that a pre-dispute arbitration provision is separate and distinct from a post-dispute arbitration agreement. In a post-dispute arbitration agreement, the parties agree to submit the dispute voluntarily. In post-dispute arbitration, the parties also agree whether the opinion of the arbitration panel will be binding or non-binding.
In my opinion, companies that engage in deceptive and unfair trade practices, like credit cards and finance companies, favor the use of pre-dispute arbitration agreements. These agreements reduce the company’s exposure to damage awards by juries. One of the biggest problems with arbitration provisions is the loss of an individual’s constitutional right to a jury trial and the use of the rules of evidence. Our Founding Fathers placed the right to a jury trial of our peers in the Constitution for a reason.
Procedurally, arbitration is much different from a jury trial. Although Arbitrators may have been judges in a past life, they are not judges when conducting an arbitration. Arbitrators do not need to follow the rules of evidence. There is quite a bit less legal maneuvering prior to the arbitration, than in the case of a jury trial. What does this all mean to a consumer? Pre-dispute arbitration clauses are designed to put another roadblock between you and justice.
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