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s It Legal for Chicago to Ban Mandatory Arbitration Clauses?

Thursday, January, 7, 2016


A recent ordinance proposed recently in Chicago could end area companies’ right to require mandatory arbitration for resolving consumer disputes. The ordinance would apply to businesses within Chicago and beyond, including those that are national retailers or bank holdings, which would affect these nationwide businesses from using mandatory arbitration nationwide. If a company were to choose arbitration, they would be required to leave Chicago. Alderman Edward Burke, the city’s longest-serving alderman in Chicago history, introduced the proposal.

 

According to Burke, the last 10 years have seen a spike in mandatory arbitration clauses in Chicago and throughout the nation. He believes no business should have this option of avoiding penalties related to discrimination, elder abuse, hate crimes, medical malpractice, and other claims of wrongdoing.

 

Most legal experts agree there are pros and cons to mandatory arbitration clauses, despite these arrangements taking a beating in recent months in the media. These agreements are made before issues arise, giving the company and consumer an efficient means of resolution. All too often, though, the clauses weigh heavily on the consumers and limit their ability to receive justice. Resolution is possible, but not in the consumer-favorable way that is possible when class action lawsuits are an option.

 

Those familiar with Burke’s proposal, whether they favor consumer-friendly regulations or not, are concerned the sweeping movement is akin to bullying business and could result in the city losing a great deal of its current business community. It is not the first time lawmakers in the city have been accused of using “the Chicago way” to get their efforts approved.