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Why Do Defendants Love Arbitration So Much?


You often hear in the news about consumers winning victories, as courts declare arbitration clauses illegal. But what are arbitration clauses, and why do big businesses, like insurance companies or large stores or companies, like them so much?

What is Arbitration?

Arbitration is like a court trial, only there are significant differences. The main difference is that the judge is not actually a judge. The judge is a private citizen. That person may be a licensed arbitrator, a retired judge, a lawyer, or some other professional. However, he or she is not a judge, who takes an oath and who is accountable to the people, the way a sitting judge in a courthouse would be.

Arbitration is very informal, compared to a real trial. The rules of evidence are relaxed. Fewer evidence is needed. All of this can seem like an advantage. But for a victim or a homeowner aggrieved by an insurance company, these can end up being real problems.

The arbitrator’s decision is final; you can almost never still take your case to court, if you don’t like what the arbitrator ruled.

No Jury

One reason why many Defendants like arbitration clauses so much, is that the arbitrator makes the decision in your case—not a jury. Defendants feel this takes the emotion or passion out of a case, eliminating what they see as a bias in favor of injury victims, or private citizens fighting large insurance companies.

For the victim, however, he or she is losing his or her day in court, and her constitutional right to have the case heard by a jury of her peers.

Bias in the Process?

There may be an inherent bias in arbitration itself. The Defendant or insurance company that you are suing, may have hundreds of arbitrations in a year. You, on the other hand, may have one in your whole lifetime (hopefully only one). That means that there may be an incentive for the arbitrator to help his or her “repeat customer,” the Defendant.

Arbitration is quicker than a real court case, but that quickness can make it harder for you to get the evidence you need to prove your case. The amount of documents you get, people your lawyer can depose, or other information needed as evidence, can be much more limited than it would be in a real court case.

Arbitration is Enforceable

It can be very difficult to challenge an arbitration clause—once you have agreed to arbitrate claims, courts are hesitant to invalidate those clauses, and allow you to take your case to court. Arbitration clauses in contracts are supposed to be set off where you can see them, not buried in a contractual provision—but they often are not, and can be missed by unwary consumers.

Contact the Miami property damage insurance attorneys at Velasquez & Associates P.A. today if you have an insurance or personal injury case that may need to go to arbitration.

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