A Privitization of the Justice System

By: Nikita Artaev, 2L, Journal Staff Member

The statement “corporations are people” has recently grown to be a household phrase.  This phrase emerged after the Supreme Court decisions of Citizens United v. Federal Election Commission and Burwell v. Hobby Lobby Stores, Inc.  These cases stated that corporations have the same basic rights and liberties (freedom of speech and freedom of religion) as any other United States resident.  However, the article In Arbitration, a “Privatization of the Justice System[1], identifies that corporations are not just people with the same rights as you and me; they are super-people with super-rights. 

The recent explosion in arbitration clauses in employment and consumer contracts like credit card, insurance, and car financing contracts has allowed corporations to not only bypass civil procedure rules, but also deny the consumer’s constitutional due process rights.  The New York Times article explains that arbitration clauses have the intention of speeding up the judicial process and reducing litigation costs.  Instead, arbitration clauses have actually been used by corporations to create a favorable home field advantage when dealing with legal issues.

Arbitration may save the corporation money, but the process still leaves the individual person with a serious financial burden.  As a result, people are just as financially restricted by arbitration as they are by a conventional lawsuit.   Even if someone decides to enter arbitration, contract clauses create extremely favorable environments for the corporations because the actual arbitrator will often times be chosen by the corporation itself.  The actual arbitrators also have an economic incentive to rule in favor of the corporations because arbitrators will repeatedly arbitrate for the same business.  Decisions of sexual harassment, workers compensation, and medical malpractice cases could all be decided by someone who is in business with the corporation who is a party to the arbitration.  

The clauses will often be hidden in a contract or framed in such a way that a person would have no choice but to sign the contract.  Even when an arbitration clause is discovered, most people do not even understand what arbitration is. The Supreme Court in 2011 also ruled that people cannot join together in arbitration hearings, therefore allowing corporations to avoid costly class action lawsuits all together.  AT&T Mobility v. Concepcion, 563 U.S. 333 (2011).  Finally, courts have rarely been able to overturn arbitration rulings because of the actual contract language.   

Arbitration is wonderful in theory because it would expedite the judicial process and cost less.  However, arbitration clauses have little regulation under contract law, giving corporations the freedom to favorably sculpt the judicial landscape around the lawsuit.  So, not only do corporations have the same rights as a citizen, but the corporation has the super-right to prevent people from the fundamental Constitutional right of having their day in court.  Courts need to look at the reality of what arbitration clauses are doing to consumer rights and crack down on a corporation’s ability to favorable privatized judicial proceedings. 



[1] Jessica Silver-Greenberg &Michael Corkery, In Arbitration, a “Privatization of the Justice System,” NEW YORK TIMES (Nov 1, 2015 ), available at http://www.nytimes.com /2015/11/ 02/business/ dealbook/in-arbitration-a-privatization-of-the-justice-system.html.