Montana Takes the Lead on Abusive Arbitration
March 24, 2009, 10:34 am
Filed under: Ian | Tags:

With unanimous support in the Montana Senate and only five dissenting votes in the House, the state of Montana has taken a positive step towards eliminating abusive arbitration. One reason why private arbitrators overwhelmingly favor corporate parties is because their decisions are kept secret.  Since large companies are subject to a fair number of suits, they learn quickly who the pro-corporate arbitrators are an refuse to hire any others.  Arbitrators who want to keep their jobs respond by becoming sockpuppets for corporate parties.

The bill, available here, requires arbitrators to disclose their past decision history so that consumers can know whether or not a company’s proposed arbitrator is nothing more than a sockpuppet.  Even better, the bill requires arbitrators to disclose any conflicts of interest which would be grounds for disqualifying a judge.  Arbitrators who fail to make adequate disclosures will have their decisions vacated.

Since many corrupt arbitration firms have grown quite wealthy through biased arbitration, the bill will almost certainly be challenged in court once it is signed into law—the firms don’t want to lose their cash cow, and their corporate clients don’t want to lose the lawsuit immunity these firms offer.  If nothing else, however, this bill reflects a growing understanding that abusive arbitration is rampant.  Hopefully, Congress will figure this out and pass the Arbitration Fairness Act soon.


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