Mandatory Arbitration and Consumer Contracts

Author

Susan Lott, Marie Hélène Beaulieu, Jannick Desforges

Organization

Public Interest Advocacy Centre (PIAC)

Published

2004

Summary

This report examines the use of mandatory arbitration clauses in consumer contracts. A mandatory arbitration clause is a clause in a contract that requires two parties (a service provider and a consumer) to arbitrate any dispute that may arise from the contract instead of taking the dispute to court. Arbitration is a form of dispute resolution, which is viewed as an alternative to traditional court processes. It involves two or more parties agreeing, through an arbitration agreement, to submit their dispute before a neutral decision maker who will make a decision that will be binding upon both parties. Arbitration clauses in consumer contracts usually appear in the form of a mandatory requirement written into a standard form contract, which the consumer is not able to negotiate or change. The report calls on provinces to introduce legislative changes that will prohibit the use of mandatory arbitration clauses and protect consumers’ right to voluntarily choose a range of dispute settlement mechanisms in their dealings with businesses, whether arbitration, small claims court or class actions.

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OCA Funded Research
This research received funding support through the Office of Consumer Affairs' Contributions Program.

Contact information

Source: Consumer Policy Research Database