Attorneys representing consumers have for many years sought to escape mandatory arbitration clauses in contracts, arguing that the arbitration system inherently and unfairly favors corporate defendants. In the wake of the 2010 Dodd-Frank Act as well as recent scandals, including revelations of fraud at Wells Fargo Bank, policymakers and public interest advocates have joined the fight against arbitration. While the recent attacks have focused on arbitration clauses in consumer contracts, arbitration clauses in other types of contracts—e.g., employment contracts and insurance policies—could also be challenged. This article will provide a brief summary of prior challenges to arbitration, review recent developments adding fuel to the fire and examine what the future of arbitration may look like.

Any dialogue about possible restrictions on pre-dispute arbitration agreements must start with the impact the Federal Arbitration Act (FAA), 9 U.S.C. 1, et seq., has on such limitations. The FAA, enacted in 1925, makes arbitration agreements “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for revocation of any contract.” The FAA applies not only to federal courts; it also precludes states from undermining the enforceability of arbitration agreements, as in Southland v. Keating, 465 U.S. 1 (1984).

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