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A call to end pre-dispute arbitration agreements
January 27, 2007 by Ross Runkel at LawMemo

Number One on the SSRN list of Employment Law downloads for last week was an essay by Symeon Symeonides, Dean at Willamette University College of Law in Salem, Oregon. The hefty title: Party Autonomy and Private-Law Making in Private International Law: The Lex Mercatoria that Isn't.

Of great interest to employment lawyers is this essay's suggestion that pre-dispute arbitration agreements - as they relate to employment contracts in which presumptively one party is in a weak bargaining position - should be made non-enforceable.

Although written by a conflicts of laws expert, this article has a lot to say about arbitrators using rules put out by private organizations as opposed to "legal" rules adopted courts or legislatures.

The abstract:

This essay discusses “non-state norms” from the perspective of American conflicts law. Commonly referred to as the “new lex mercatoria,” these norms are drafted by various international or intra-national non-governmental organizations and are proposed for incorporation by contracting parties or for application by arbitrators, with or without the parties' prior consent.

Understandably, these norms are popular among many arbitrators who tend to place them on the same footing as law. Current U.S. arbitration law uncritically permits this treatment to the extent it does not allow judicial review of an arbitrator's choice of law (or non-law). The fact that, unlike the law of most countries, American law generally enforces pre-dispute arbitration clauses in consumer contracts and most employment contracts can further exacerbate the situation. In contrast, in contracts that are not subject to arbitration, American courts apply non-state norms only to the extent they have been expressly incorporated into the contract and only if their application would not displace non-waivable rules of the law that would otherwise govern the contract.

This essay applauds the latter position of American conflicts law but suggests that U.S. arbitration law should be reformed so as to provide needed protection to consumers, employees, and other presumptively weak parties.

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