Arbitration Surrounded by Other Related WordsArbitration in and of itself is not necessarily a bad way to settle a dispute. When you enter into the process willingly, or you initiate the process, you understand what you are agreeing to and are willing to accept the results. However, when you are forced into arbitration to settle a dispute with a car dealer you could be blindsided by the process. How do you know when you will be forced into arbitration? Find out here.

What Is Arbitration?

Arbitration is simply the process of settling a dispute through an arbitration committee, rather than through the court system. In voluntary arbitration, the two parties agree to accept the ruling of the arbitrator and understand that the arbitrator’s decision is final. This process can save a great deal of time and money, but if both parties are not sold on the idea, it can be problematic.  Furthermore the arbitrator is paid for by the defendant, and thus may not be as neutral as a judge in court.  

How Forced Arbitration Happens

How can you be forced to settle a dispute through arbitration? Some companies, including car dealers, make agreeing to arbitration a condition of doing business. For example, when you sign a contract to buy a car, there is likely a clause in the contract requiring any disputes that arise from the sale should not go to court where you would request a jury trial, but must go through arbitration. While you may not have noticed this clause, or perhaps you didn’t understand what you were agreeing to, you will be held to it should a dispute arise. When you agree to arbitration, you give up your right to sue the other party in court if their side of the agreement is not upheld. You will be forced to accept the decision of the arbitrator and will have no realistic right to appeal their decision. Companies almost always have the advantage in arbitration, so, if you have the choice, it is best not to agree to settle disputes through arbitration.

You Probably Will Not Have a Choice

Unfortunately, once you have signed the contract with a forced arbitration clause, you will have no choice but to settle your dispute through arbitration. This is why it is so important to read your contract carefully and to ask questions about arbitration clauses before signing. While you will not be able to change the contract, you may be able to go to a dealer who does not require arbitration.  If your car dealer won't excluded it from the contract on the vehicle you are negotiating for, leave.  At the very least, you will know what you are agreeing to and will not be surprised if you end up in arbitration.  If you think this arbitration system is unfair, as we do, please tell your elected representative to support any legislation prohibiting arbitration in contracts between businesses and consumers.  We would like to put an end to forced arbitration clauses.