January 12, 2010

Jonathan Adler at The Obiter Dictum (New York Law School) outlines arguments made by Paul Bennett Marrow:

1. Entering into a contract containing a mandatory arbitration clause is essentially a voluntary choice made by all parties involved.
2. Mandatory arbitration is needed to mitigate the effects of asymmetrically-held information.
3. A commercial system without the right to arbitrate will (a) suffer from increased costs across the board, (b) limit lending to only the safest recipients, and (c) overburden courts.
4. There is insufficient empirical evidence to support enacting the Arbitration Fairness Act of 2009.