Imre S. Szalai, Judge John D. Wessel Distinguished Professor in Social Justice at Loyola University New Orleans College of Law, has published “A New Legal Framework for Employee and Consumer Arbitration Agreements,” 19 Cardozo J. Conflict Resol. 653 (2018); Loyola University New Orleans College of Law Research Paper No. 2018-09. In his journal article, Professor Szalai examines whether it is proper for a court to sever a harsh or oppressive term that is contained in an employment or consumer arbitration clause under the Federal Arbitration Act.
The abstract states:
If an arbitration clause in an employment or consumer agreement contains a harsh term, such as an abbreviated statute of limitations or a provision requiring arbitration in a distant location, judges will sometimes sever the harsh term and enforce the rest of the arbitration clause. In fact, some judges believe the Federal Arbitration Act and its strong federal policy favoring arbitration require severance of any harsh provisions so that arbitration will still occur minus the oppressive terms. This severance approach may encourage drafting parties to overreach and include harsh terms in an arbitration clause if the only penalty at the end of the day is mere severance of such terms. This Article demonstrates that the Federal Arbitration Act embodies a simple, binary approach to the enforcement of arbitration agreements: either an arbitration agreement is fully enforceable, or it is not enforceable at all. As a matter of federal law, the text, history, and policy of the Federal Arbitration Act require courts to invalidate an arbitration clause in its entirety if it contains any harsh provisions. Severance of harsh terms should not be permitted under the FAA in order to rescue parties who draft arbitration clauses with oppressive terms.
This and other research papers written by Professor Szalai are available for download from the Social Science Research Network.
Photo credit: Cytonn Photography on Unsplash
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