Arbitrating B2C Disputes: Vice or Virtue?

Abstract

This paper deals with the difficulties that arise when arbitration is used to solve contractual disputes between businesses and consumers, so called ‘B2C disputes’. Among these difficulties are the frequent use of pre-dispute arbitration clauses, class action waivers and potentially high costs in arbitration. The author argues that freedom of contract, the basic principle of contract law, must not be completely disregarded just because a consumer is involved. Businesses and consumers should be allowed to enter into arbitration agreements. However, the parties’ experience in arbitration and their financial means are imbalanced, an unusual situation in arbitration. The author, therefore, makes suggestions how legislators should draft a legal framework which balances freedom of contract and consumer protection and ensures arbitration will be beneficial for both parties to a B2C dispute. These suggestions are based on a critical appraisal of the way that Canada, the United States of America, the European Union, New Zealand and major arbitration organisations deal with arbitration in B2C disputes.