DOI QR코드

DOI QR Code

Arbitration Clause Prohibiting Class Action in Consumer Contracts

  • Yi, Sun (International Commercial Arbitration, Pepperdine Law School, International Studies Yonsei University)
  • Received : 2016.09.01
  • Accepted : 2017.02.22
  • Published : 2017.03.02

Abstract

For recent years, several disputes between Korean consumers and multinational companies have arisen. Since the disputes were big and material that children's safety was at issue, a question started if Korean law properly has protected consumers' rights against multinational companies. While the Korean legal society tried to legislate punitive compensation with this concern, the U.S. Supreme Court reached an interesting case law regarding consumer contracts. A recent trend on consumer contracts in the United States shows that general terms have arbitration clause with class action waiver. As much as international arbitration has worked as the most effective resolution in international commercial disputes, the concept is still foreign and the experts are not approachable to lay individual consumers. However, class action in arbitration can hugely help for lay individual consumers to bring a case before arbitration tribunal. California courts consistently showed the analysis that the practical impact of prohibiting class action in arbitration clause is to ban lay individual consumers from fighting for their rights. However, the Supreme Court held that the arbitration clause shall be enforced as parties agree even if consumers practically cannot fight for their rights in the end. Even though consumer contracts are a typical example of lack of parity and of adhesive contract, the Supreme Court still applies liberalism that parties are equal in power and free to agree. This case law has a crucial implication since Korean consumers buy goods and services from the U.S. and other countries in everyday life. Accordingly, they are deemed to agree on the dispute resolution clauses, which might violate their constitutional right to bring their cases before the adjudication tribunal. This issue could be more important than adopting punitive compensation because consumers' rights are not necessarily governed by Korean law but by the governing law of the general terms and conditions chosen and written by the multinational companies. Thus this paper studies and analyzes the practical reality of international arbitration and influence of arbitration clause with class action waiver with the U.S. Supreme Court and California case laws.

Keywords

References

  1. http://www.ikea.com/us/en/about_ikea/newsitem/062816-recall-chest-and-dressers
  2. http://blog.daum.net/mojjustice/8707930
  3. https://www.britannica.com/topic/laissez-faire
  4. https://www.ftc.gov
  5. http://www.apple.com/legal/internet-services/terms/site.html
  6. California Practical. Guide Federal. Civil. Procedure. Before Trial Ch. 10-C
  7. Commentaries on Equity Pleadings § 97 (J. Gould 10th rev. ed. 1892)
  8. David Clancy & Matthew Stein, An Uninvited Guest:Class Arbitration and the Federal Arbitration Act's Legislative History, 63 BUS. LAW. 55, 62-63, 67 (2007)
  9. Elizabeth Sepper, Free Exercise Lochnerism, 115 Colum. L. Rev. 1453(2015),
  10. F. Calvert, A Treatise upon the Law Respecting Parties to Suits in Equity 17-29 (1837)
  11. Gary Born & Claudio Salas, The United States Supreme Courtand Class Arbitration:A Tragedy of Errors, 2012
  12. Gary Born and Claudio Salas; Thomas Stipanowich, The Third Arbitration Trilogy: Stolt-Nielsen, Rent-A-Center, Concepcion and the Future of American Arbitration, available at http://ssrn.com/abstract=1919936
  13. Hazard, Gedid, & Sowle, An Historical Analysis of the Binding Effect of Class Suits, 146 U. Pa. L.Rev. 1849, 1859-1860 (1998)
  14. Kaplan, A Prefatory Note, 10 B.C. Ind. & Com. L.Rev. 497 (1969)
  15. Louise A. Halper, Christopher G. Tiedeman, "Laissez-Faire Constitutionalism" and the Dilemmas of Small-Scale Property in the Gilded Age, 51 Ohio St. L.J. 1349, 1362-63 (1990)
  16. Marcin, Searching for the Origin of the Class Action, 23 Cath. U.L.Rev. 515, 517-524 (1973)
  17. Michael A. Clithero, Is Your Arbitration Clause Prohibiting Class Arbitration Enforceable?, Journal of the Missouri Bar, July-August 2013
  18. S.I. Strong, Class, Mass, and Collective Arbitration in National and International Law, pp 2.25-2.120
  19. S.I. Strong, The Sounds of Silence: Are U.S. Arbitrator Creating Internationally EnforceableAwards in Cases of Contractual Silence or Ambiguity, 30 MICH. J. INT'L L. 1017, 1048-49 (2009)
  20. S. Yeazell, From Medieval Group Litigation to the Modern Class Action (1987)
  21. The President and fellows of Harvard college against JSC Surgutneftegaz, 770 PLI/LIT. 127, 155 (2008)
  22. Thomas Doyle, Protecting Nonparty Class Members in Class Arbitration, 25 A.B.A. J. LAB. & EMP. L. 25, 26-27 (2009)
  23. William H. Baker, Class Action Arbitration, 10 Cardozo J. Conflict Resolution 335, 346-47 (2009)
  24. Yoonjik Kwak and Jaehyung Kim, General Principles of Civil Law: Lecture on Civil Law 1, Bakyoungsa, 2013
  25. Z. Chafee, Some Problems of Equity 161-167, 200-203 (1950)