Friday, July 17, 2015

ADR Tip: Voiding "Sham" Arbitration Agreements

ADR Tip -- If a client presents you with an arbitration clause that identifies rules or an administrator that are unknown or unfamiliar, the arbitration agreement could be void. 

Check out the article written by P. Jean Baker, Young Lawyers: Recognizing "Sham" Agreements to Arbitrate, for the ABA Section of Litigation's Alternative Dispute Resolution's E-Newsletter.  

Ms. Baker describes two cases that refused to enforce arbitration agreements contained within high interest loan transactions which specified that disputes "shall be conducted by the Cheyenne River Sioux Tribal Nation by an authorized representative in accordance with its consumer dispute rules." Inetianbor v. CashCall, Inc., 768 F.3d 1346 (11th Cir. 2014), cert. denied (S. Ct. Apr. 6, 2015); Jackson v. Payday Financial, LLC, 764 F.3d 765 (7th Cir. 2014). 

The arbitration agreements were not enforced because there were lack of arbitration rules and procedures in place to conduct a fair arbitration process.  

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