[PASSED] Fair Arbitration Act

[Cretox State]

"We believe that forced arbitration is an infringement on the rights of individuals and a vile practice that cannot be allowed to continue. Any feedback on this proposal (especially on language, duplication, and potential loopholes) would be appreciated, as our delegation has not interacted with the General Assembly for quite some time."

OOC: Predispute arbitration agreements between two parties of relatively equal bargaining power (e.g., concerning international commerce) are no longer banned, since such agreements can often be beneficial, and I see no reason they should be prohibited.

OOC: Submitted: https://www.nationstates.net/page=UN_vi ... 1592885315

OOC: This is now at vote! I’d like to thank everyone who offered feedback and helped make this possible. Your input has been invaluable.

Fair Arbitration Act

Category: Regulation | Area of Effect: Legal Reform

The World Assembly,

Acknowledging that disputes between firms and individuals often arise over matters of civil rights, employment, and consumer goods;

Noting that joint, class, and collective lawsuits are a crucial avenue through which individuals and small businesses may settle such disputes with larger firms and seek compensation for incidents of wrongdoing;

Understanding that arbitration, when a voluntary decision by two parties in an equal bargaining position, is a valid and often desirable avenue of settling disputes such as those related to international commerce;

Distraught, however, at the widespread use by firms of forced arbitration agreements and agreements that waive the right to sue, which are often a condition of employment or using a product or service, are often poorly-understood by the individual, and often take place in a private forum controlled by said firm;

Recognizing that protecting the ability of individuals to seek relief for violations of their rights protects the public interest and safeguards commerce;

Seeking to end the unjust use of forced arbitration agreements, which undermine the rights of workers and consumers;

Hereby,

1. Defines for the purposes of this legislation:
   1. "Arbitration" as the deciding of a legal dispute in a private forum outside of a member-nation's judiciary or international court of law, the decision made by which is legally binding and enforceable;
   2. A "forced arbitration agreement" as a legally binding and enforceable agreement mandating the use of arbitration to resolve a dispute that has not yet arisen at the time of the agreement;
   3. A "legal action waiver" as a legally binding and enforceable agreement, whether or not part of a forced arbitration agreement, which prevents at least one party to the agreement from participating in a joint, class, or collective legal action concerning a dispute that has not yet arisen at the time of the agreement, when they would otherwise be able to do so;
2. Further defines for the purposes of this legislation:
   1. An "antitrust dispute" as any dispute arising from an alleged violation of national, international, or other legislation regulating the conduct and organization of firms with the purpose of promoting or maintaining market competition;
   2. A "civil rights dispute" as any dispute arising from an alleged violation of national, international, or other legislation protecting an individual against arbitrary or discriminatory treatment, in which at least one party alleging such a violation is one or more individuals or their authorized representative;
   3. A "consumer dispute" as any dispute between one or more individuals who seek or acquire real or personal property, services, investments, money, or credit for personal, family, or household purposes; and the seller or provider of such or a third party involved in the selling or providing of such;
   4. An "employment dispute" as any dispute between an employer and one or more individuals or their authorized representative, concerning or related to the current work relationship or a prospective work relationship between them;
3. Declares:
   1. No forced arbitration agreement or legal action waiver shall be valid or enforceable with respect to an antitrust, civil rights, consumer, or employment dispute that arises after this law becomes effective;
   2. No clause of this legislation shall be applicable to any agreement between a firm and a labor organization, or between labor organizations, unless such an agreement has the effect of waiving or unduly interfering with the ability of an individual to seek judicial enforcement of their legally-given rights;
   3. No clause of this legislation shall be applicable to any international commercial agreement between two firms, or similar agreement of an international character between two firms, unless such an agreement has the effect of waiving or unduly interfering with the ability of an individual to seek judicial enforcement of their legally-given rights;
4. Encourages member-nations to protect the ability of individuals to seek judicial enforcement of their legally-given rights;
5. Clarifies that the applicability of this legislation to an arbitration agreement and the validity and enforceability of an agreement to which this legislation applies shall not be determined through arbitration, irrespective of whether said agreement purports to handle such determinations through arbitration;
6. Further clarifies that no part of this legislation shall be construed to prevent individuals and firms from voluntarily seeking arbitration of a dispute after said dispute arises.

Forced Arbitration Ban

Category: Regulation | Area of Effect: Legal Reform

The World Assembly,

Acknowledging that disputes between firms and individuals often arise over matters of civil rights, employment, and consumer goods;

Noting that joint, class, and collective lawsuits are a crucial avenue through which individuals and small businesses may settle such disputes with larger firms and seek compensation for incidents of wrongdoing;

Understanding that arbitration, when a voluntary decision by two parties in an equal bargaining position, is a valid and often desirable avenue of settling disputes such as those related to international commerce;

Distraught, however, at the widespread use by firms of forced arbitration agreements and agreements that waive the right to sue, which are often a condition of employment or using a product or service, are often poorly-understood by the individual, and often take place in a private forum controlled by said firm;

Recognizing that protecting the ability of individuals to seek relief for violations of their rights protects the public interest and safeguards commerce;

Seeking to end the unjust use of forced arbitration agreements, which undermine the rights of workers and consumers;

Hereby,

1. Defines for the purposes of this legislation:
   1. "Arbitration" as the deciding of a legal dispute in a private forum outside of a member-nation's judiciary or international court of law, the decision made by which is legally binding and enforceable;
   2. A "forced arbitration agreement" as a legally binding and enforceable agreement mandating the use of arbitration to resolve a dispute, when said dispute has not yet arisen at the time of the agreement;
   3. A "legal action waiver" as a legally binding and enforceable agreement which prevents at least one party to the agreement from participating in a joint, class, or collective legal action regarding a dispute that has not yet arisen at the time of the agreement, when they would otherwise be able to do so;
2. Prohibits:
   1. All forced arbitration agreements;
   2. All legal action waivers;
3. Invalidates all existing forced arbitration agreements and legal action waivers as applicable to disputes occurring after this law becomes effective;
4. Asserts that no clause of this legislation is applicable to any agreement between a firm and a labor organization, or between labor organizations, unless such an agreement has the effect of waiving or unduly interfering with the ability of an individual to seek judicial enforcement of their legally-given rights;
5. Encourages member-nations to protect the ability of individuals to seek judicial enforcement of their legally-given rights;
6. Clarifies that no part of this legislation shall be construed to prevent individuals and firms from voluntarily seeking arbitration of a dispute after said dispute arises.

[/list][/list]

[Tinhampton]

Smith: Is this anything to do with the WORRIED clause that your delegation has inserted in its proposed repeal of the Rights of the Employed? In any event, we're pleased to see this.

[Cretox State]

Smith: Is this anything to do with the WORRIED clause that your delegation has inserted in its proposed repeal of the Rights of the Employed? In any event, we're pleased to see this.

“Our delegation prides itself on drawing inspiration from a variety of sources. We also believe that if existing legislation can be strengthened by a resolution on a given topic, every effort should be made to propose such a resolution.”

[Christian Democrats]

We're curious how you'd justify this proposal legally. The WA guarantees freedom of contract to individuals.

[Imperium Anglorum]

Freedom to Contract doesn't block anything unless it lacks a compelling policy purpose or you want to eliminate member nation enforcement of valid contracts.

[American Pere Housh]

"We believe that forced arbitration is an infringement on the rights of individuals and a vile practice that cannot be allowed to continue. Any feedback on this proposal (especially on language, duplication, and potential loopholes) would be appreciated, as our delegation has not interacted with the General Assembly for quite some time."

Category: Regulation | Area of Effect: Legal Reform

The World Assembly,

Acknowledging that disputes between firms and individuals often arise over matters of civil rights, employment, and consumer goods;

Noting that joint, class, and collective lawsuits are a crucial avenue through which individuals and small businesses may settle such disputes with larger firms and seek compensation for incidents of wrongdoing;

Understanding that arbitration, when a voluntary decision by the involved parties, is a valid avenue of settling disputes such as those related to international commerce;

Distraught, however, at the prevalence of the use by firms of forced arbitration agreements and agreements that waive the right to sue, which are often a condition of employment or using a product or service, and often take place in a private forum controlled by said firm;

Seeking to end the unjust use of forced arbitration agreements, which grossly violate the rights of workers and consumers;

Hereby,

1. Defines:
   1. "Arbitration" as the deciding of a legal dispute in a private forum outside of a member-nation's judiciary or international court of law, the decision made by which is legally binding and enforceable;
   2. "Forced arbitration agreements" as pre-dispute agreements mandating the use of arbitration to resolve any existing and future disputes between the involved parties;
2. Prohibits:
   1. All forced arbitration agreements;
   2. All agreements and practices that prevent or otherwise unnecessarily impede individuals and small businesses from participating in a joint, class, or collective legal action;
3. Invalidates all existing forced arbitration agreements as applicable to disputes occurring after this law becomes effective;
4. Asserts that no clause of this legislation is applicable to any agreement between a firm and a labor organization, or between labor organizations, unless such an agreement has the effect of waiving the right of an individual to seek judicial enforcement of their legally-given rights;
5. Encourages member-nations to protect the rights of individuals to seek judicial enforcement of their legally-given rights.
6. Clarifies that no part of this legislation shall be used to prohibit voluntary arbitration.

Jonathan rubs the beard now growing on chin, "I see no flaws in this proposal. It is well made and as such APH will support it."

[Christian Democrats]

Freedom to Contract doesn't block anything unless it lacks a compelling policy purpose or you want to eliminate member nation enforcement of valid contracts.

Please articulate the compelling reason for banning "pre-dispute agreements mandating the use of arbitration."

[Araraukar]

OOC: Since pure Legalese without practical applications is always difficult for me to grasp in English, could someone give an actual RL kind of example of the conceived problem?

[Separatist Peoples]

OOC: Since pure Legalese without practical applications is always difficult for me to grasp in English, could someone give an actual RL kind of example of the conceived problem?

Ooc: any form contract you have with a big corporation or business will have this clause. It means you can't sue them, but have to submit to private mediation, which is less expensive and not public, and also probably fairly biased for the business. Its a fairly prevalent real world issue.

[Kenmoria]

Freedom to Contract doesn't block anything unless it lacks a compelling policy purpose or you want to eliminate member nation enforcement of valid contracts.

Please articulate the compelling reason for banning "pre-dispute agreements mandating the use of arbitration."

(OOC: The entire preamble of the proposal lays out the compelling reason for banning mandatory arbitration. Preventing individuals from being forced into biased arbitration and preventing them from exercising their right to sue is definitely a compelling purpose.)

[Araraukar]

OOC: Since pure Legalese without practical applications is always difficult for me to grasp in English, could someone give an actual RL kind of example of the conceived problem?

Ooc: any form contract you have with a big corporation or business will have this clause. It means you can't sue them, but have to submit to private mediation, which is less expensive and not public, and also probably fairly biased for the business. Its a fairly prevalent real world issue.

OOC: Yeah, but on what kind of things would this exist? Like, if you work for them? If you buy items from them? I don't live in a sue-happy culture, so this sounds fairly alien to me.

But if it's prevalent in RL, then that means that it's not a big problem? I mean, it might be a big problem to an individual, but on the societal level?

[Grey County]

"We believe that forced arbitration is an infringement on the rights of individuals and a vile practice that cannot be allowed to continue. Any feedback on this proposal (especially on language, duplication, and potential loopholes) would be appreciated, as our delegation has not interacted with the General Assembly for quite some time."

Category: Regulation | Area of Effect: Legal Reform

The World Assembly,

Acknowledging that disputes between firms and individuals often arise over matters of civil rights, employment, and consumer goods;

Noting that joint, class, and collective lawsuits are a crucial avenue through which individuals and small businesses may settle such disputes with larger firms and seek compensation for incidents of wrongdoing;

Understanding that arbitration, when a voluntary decision by the involved parties, is a valid avenue of settling disputes such as those related to international commerce;

Distraught, however, at the prevalence of the use by firms of forced arbitration agreements and agreements that waive the right to sue, which are often a condition of employment or using a product or service, and often take place in a private forum controlled by said firm;

Seeking to end the unjust use of forced arbitration agreements, which grossly violate the rights of workers and consumers;

Hereby,

1. Defines:
   1. "Arbitration" as the deciding of a legal dispute in a private forum outside of a member-nation's judiciary or international court of law, the decision made by which is legally binding and enforceable;
   2. "Forced arbitration agreements" as pre-dispute agreements mandating the use of arbitration to resolve any existing and future disputes between the involved parties;
2. Prohibits:
   1. All forced arbitration agreements;
   2. All agreements and practices that prevent or otherwise unnecessarily impede individuals and small businesses from participating in a joint, class, or collective legal action;
3. Invalidates all existing forced arbitration agreements as applicable to disputes occurring after this law becomes effective;
4. Asserts that no clause of this legislation is applicable to any agreement between a firm and a labor organization, or between labor organizations, unless such an agreement has the effect of waiving the right of an individual to seek judicial enforcement of their legally-given rights;
5. Encourages member-nations to protect the rights of individuals to seek judicial enforcement of their legally-given rights.
6. Clarifies that no part of this legislation shall be used to prohibit voluntary arbitration.

I don't agree with this as every person can say no to a contract and each person has freedom of contract. Also you might run into gensec problems because of an outright ban

[Cretox State]

We're curious how you'd justify this proposal legally. The WA guarantees freedom of contract to individuals.

According to #205, "CLARIFIES that while a person must generally be permitted to contract freely, member nations - either individually or through collective WA action - may regulate certain contracts or agreements within their jurisdiction if doing so is necessary to meet some compelling public policy interest." Regulating forced arbitration most certainly qualifies as a "compelling public policy interest."

Additionally, that resolution defines a contract as being "an agreement between two or more persons." We are not entirely certain whether the WA's definition of a "person" includes corporations, but it does allow for some flexibility should it be needed.

[Araraukar]

Regulating forced arbitration most certainly qualifies as a "compelling public policy interest."

OOC: Why? How?

Additionally, that resolution defines a contract as being "an agreement between two or more persons." We are not entirely certain whether the WA's definition of a "person" includes corporations, but it does allow for some flexibility should it be needed.

Even in a corporation, there's going to be some person signing the contract on their end, even when they do so on behalf of the corporation.

[Cretox State]

OOC: Why? How?

OOC: Forced arbitration clauses in contracts (regarding employment, purchasing a product such as insurance or a cell phone, etc.) prevent workers/consumers from being able to take legal action against the corporation whose contract is being signed. This means you can't sue for discrimination, harassment, abuse, retaliation, or wrongful termination by your employer (rendering legislation protecting workers from discrimination/guaranteeing equal treatment/protecting from retaliation all but meaningless). Additionally, consumers cannot take legal action for negligence, defective products, or scams. Let's say a relative is harmed in a nursing home. With forced arbitration, you can't hold the company accountable in court. With forced arbitration, the nursing home can take any complaints to court, but you as the consumer can't. The only legal recourse individuals have in these cases is arbitration in a forum and with an arbitration company determined by the firm whose contract you signed.

Corporations already hold disproportionate power over employees and consumers, especially in markets where there are a few large sellers of a product, only one seller, or only a few or one company hiring labor. You can try to find an alternative that doesn't have forced arbitration, but such an alternative may not exist. If you need a job, are you going to go unemployed because every company in town has forced arbitration? Are you going to refuse to buy a car? If a consumer has to make these decisions to begin with, there is something seriously wrong with forced arbitration.

Ultimately, "freedom to contract" only works if the parties involved are fairly equal in terms of power. It's not freedom when one party can dictate terms to the other.

Even in a corporation, there's going to be some person signing the contract on their end, even when they do so on behalf of the corporation.

A person may be signing on behalf of the company, but the agreement itself is between an individual and a company as legal entities.

[Christian Democrats]

We're curious how you'd justify this proposal legally. The WA guarantees freedom of contract to individuals.

According to #205, "CLARIFIES that while a person must generally be permitted to contract freely, member nations - either individually or through collective WA action - may regulate certain contracts or agreements within their jurisdiction if doing so is necessary to meet some compelling public policy interest." Regulating forced arbitration most certainly qualifies as a "compelling public policy interest."

That's little more than a bare assertion. We struggle to see how your proposal, which would ban virtually all arbitration agreements, promotes an interest that is (1) compelling and (2) public.

[Sciongrad]

Freedom to Contract doesn't block anything unless it lacks a compelling policy purpose or you want to eliminate member nation enforcement of valid contracts.

Please articulate the compelling reason for banning "pre-dispute agreements mandating the use of arbitration."

The author doesn't need to produce a compelling policy reason that convinces you, they just need to point to some policy reason. There is a plausible policy argument that in contracts of adhesion, forced arbitration often denies consumers and employees relief even for meritorious claims. You might point to evidence that shows that's not the case, that arbitration is efficient and therefore generates net benefits to the public, etc. But you know quite well that this is a live academic debate. GenSec is not going to evaluate the merits of a plausible policy argument, we only need to confirm there is one. The principle here should be the same as the one we use to determine contradictions with GA 68.

Ooc: any form contract you have with a big corporation or business will have this clause. It means you can't sue them, but have to submit to private mediation, which is less expensive and not public, and also probably fairly biased for the business. Its a fairly prevalent real world issue.

OOC: Yeah, but on what kind of things would this exist? Like, if you work for them? If you buy items from them? I don't live in a sue-happy culture, so this sounds fairly alien to me.

But if it's prevalent in RL, then that means that it's not a big problem? I mean, it might be a big problem to an individual, but on the societal level?

You've probably signed dozens of these. Any time you sign a contract of adhesion (think the terms of service for Netflix, Hulu, Spotify, etc.), you are agreeing to mandatory arbitration. That means you can't sue the service provider in court, you have to go through a private mediator specified by the contract. You sometimes find this in employment contracts too. One related problem in the U.S. context is that these arbitration "agreements" often preclude class arbitration too. But individual arbitration often costs more than your claim is worth (suppose your claim against Netflix is worth $100, but it would cost much more to go through arbitration, whereas in a class arbitration, the costs would be spread across all the plaintiffs). This has the effect of insulating companies and employers from meritorious claims, because no one will bring a meritorious claim that loses them money. See generally.

[Imperium Anglorum]

Freedom to Contract doesn't block anything unless it lacks a compelling policy purpose or you want to eliminate member nation enforcement of valid contracts.

Please articulate the compelling reason for banning "pre-dispute agreements mandating the use of arbitration."

That's unnecessary. The author need merely assert its existence in the proposal.

[Christian Democrats]

Please articulate the compelling reason for banning "pre-dispute agreements mandating the use of arbitration."

The author doesn't need to produce a compelling policy reason that convinces you, they just need to point to some policy reason. There is a plausible policy argument that in contracts of adhesion, forced arbitration often denies consumers and employees relief even for meritorious claims. You might point to evidence that shows that's not the case, that arbitration is efficient and therefore generates net benefits to the public, etc. But you know quite well that this is a live academic debate. GenSec is not going to evaluate the merits of a valid policy argument, we only need to confirm there is one. The principle here should be the same as the one we use to determine contradictions with GA 68.

Yes, that's a plausible argument for contracts of adhesion, but this proposal would go much further. Indeed, it would extend to all "legally binding and enforceable pre-dispute agreements mandating the use of arbitration." There's not a strong argument, from any reasonable point of view, for prohibiting such agreements altogether. The furthest any proposal could extend, while complying with Freedom to Contract's terms, would be to provide an opt-out. (See credit card agreements in the real-world United States for examples.)

[Cretox State]

Yes, that's a plausible argument for contracts of adhesion, but this proposal would go much further. Indeed, it would extend to all "legally binding and enforceable pre-dispute agreements mandating the use of arbitration." There's not a strong argument, from any reasonable point of view, for prohibiting such agreements altogether. The furthest any proposal could extend, while complying with Freedom to Contract's terms, would be to provide an opt-out. (See credit card agreements in the real-world United States for examples.)

Under what circumstances would prohibiting all such agreements be any different, from a resolution legality standpoint, than only prohibiting standard form contracts that mandate arbitration? This proposal explicitly protects voluntary arbitration. It in no way interferes with the ability of individuals and firms to use voluntary arbitration to resolve disputes, and in no way discourages the use of arbitration unless it is mandated by prior contract or otherwise. What argument is there for permitting any form of forced arbitration? In the US, corporations were historically so opposed to forced arbitration that they consistently lobbied Congress to prohibit forced arbitration within their industries, for example between automobile dealerships and manufacturers. I honestly do not see any legality issue with the proposal as currently written.

[Imperium Anglorum]

Contracts that people sign are generally unforced and voluntary. That is implied by the meeting of the minds. How does your proposal distinguish such contracts which mandate arbitration, entered voluntarily, from your separate class of "forced" arbitrations?

[Christian Democrats]

Yes, that's a plausible argument for contracts of adhesion, but this proposal would go much further. Indeed, it would extend to all "legally binding and enforceable pre-dispute agreements mandating the use of arbitration." There's not a strong argument, from any reasonable point of view, for prohibiting such agreements altogether. The furthest any proposal could extend, while complying with Freedom to Contract's terms, would be to provide an opt-out. (See credit card agreements in the real-world United States for examples.)

Under what circumstances would prohibiting all such agreements be any different, from a resolution legality standpoint, than only prohibiting standard form contracts that mandate arbitration? This proposal explicitly protects voluntary arbitration. It in no way interferes with the ability of individuals and firms to use voluntary arbitration to resolve disputes, and in no way discourages the use of arbitration unless it is mandated by prior contract or otherwise. What argument is there for permitting any form of forced arbitration? In the US, corporations were historically so opposed to forced arbitration that they consistently lobbied Congress to prohibit forced arbitration within their industries, for example between automobile dealerships and manufacturers. I honestly do not see any legality issue with the proposal as currently written.

That might be your intention, but your proposal says something different. It says it would ban "pre-dispute agreements." In a large number of cases, there's no reason to prevent individuals and companies from voluntarily pre-committing themselves to arbitration. Such agreements reduce the expected costs of contracts to private parties, promote commerce, and reduce government enforcement costs.

[Cretox State]

Contracts that people sign are generally unforced and voluntary. That is implied by the meeting of the minds. How does your proposal distinguish such contracts which mandate arbitration, entered voluntarily, from your separate class of "forced" arbitrations?

As currently written, the proposal defines “forced arbitration agreements” as any contract that mandates the use of arbitration. The “forced” stems from the nature of the arbitration, not entry into the contract (if I understand you correctly). While the definitions could be altered to exclude certain types of contracts, I do not see the benefit in doing so. The proposal does not impact the ability of people to seek arbitration; it only prevents the arbitration from being mandated by a contract. What benefit would there be in committing to arbitration, when arbitration could still be sought should the parties involved desire it?

[Imperium Anglorum]

The reasons CD gave you above.

Also, a contact to arbitrate would mandate arbitration.

[Araraukar]

OOC: Trying to understand, still - so it's basically like the end user agreement that you need to agree with to use online services (like Netflix), only applied to offline things too, and items too, not just services? (How it would even apply to a work contract, I don't get, but that's likely the least relevant here.)

Isn't the whole "you can't sue them for (for example) discrimination" thing a moot one, in WA context, though? We have resolutions that mandate the nations make sure that discriminatory stuff doesn't happen, and I'm fairly sure whatever deal I sign with Netflix, wouldn't stop any of the actual RL nations from sueing them for something. And IA has seen to it that the WA has the enforcement agency, too, if the nation were to claim it can't do anything.

So the issue wouldn't be an issue beyond freely-entered contracts, which you can't unilaterally ban without violating the previous resolution (because the compelling reason doesn't exist in WA world).

Or am I missing something?