Proposed Legislation Would Set Back Corporations' Use Of Arbitration Clauses

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 bill would place restrictions on companies' use of arbitration clauses in agreements with consumers. Mandatory arbitration clauses have become a common — and controversial — feature of many consumer contracts. In signing agreements with banks, credit card companies, and cellular service providers, consumers frequently agree that they will arbitrate disputes, rather than sue in court. The practice of so-called "mandatory arbitration" has been widened and approved by several recent Supreme Court decisions, such as AT&T Mobility v. Concepcion and American Express Co. v. Italian Colors Restaurant. Advocates argue that arbitration clauses force consumers to give up their right to sue the company in court or participate in a class-action lawsuit. From the perspective of businesses, however, these clauses