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Since the enactment of the Federal Arbitration Act (“FAA”) in 1925, arbitration clauses have been embedded in the commercial contractual ambit and have been a predominant tool employed not only in transactions between corporations, but most importantly between corporations and individuals. Arbitration is a tool used in both the public and private sector to resolve disputes without channeling the usual litigation route. Arbitration, like other forms of alternative dispute resolution (“ADR”), has attributes beneficial to the disputing parties. It “reduces the judiciary’s workload and reduces litigation costs, allowing companies to offer lower prices and higher wages.” It is known to be an expeditious process with less expenses than its counterpart, litigation. However, although beneficial, mandatory arbitration in employment agreements can be detrimental to employees’ goals. Arbitration decisions are protected from judicial review, meaning that once the arbitrators reach a decision, it will be binding among the parties and, in most cases, not be appealed. Although there is no right to appeal in arbitration, a party can challenge the decision under certain, limited circumstances. Arbitration also offers privacy, an attractive feature to companies. Parties can contractually agree for the arbitration proceeding to be “confidential to the fullest extent allowed by law.”


This comment appeared in the online supplement to University of Dayton Law Review, Volume 49, Issue 3.

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