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Supreme Court Justices Support Corporation Rights in Dispute Resolution

Wednesday, June, 26, 2013


The Supreme Court considered the issue of whether corporations were within their rights to generate their own rules regarding dispute resolution with their customers.  They determined that a group of merchants were bound by an agreement with American Express.  The merchants had disagreed with the agreement, arguing that the terms in the agreement written by American Express outlined certain types of claims that would be too expensive to pursue from the customer end. 


For businesses, arbitration has generally been a more expedient and less expensive way to address legal issues.  Although customers have argued that the arbitration process might not represent their best interests and result in automatic decisions for the business.  Businesses disagree, arguing that arbitration should be used where it's articulated in agreements. 


Other benefits of arbitration involve providing better access to the legal system for consumers, rather than forcing them to go through the traditional litigation process.  Transaction costs all around are reduced, and the time delays associated with traditional procedures are cut tremendously.  As more litigation moves into the court system, the less efficient that scheduling and going through court becomes.  Courts across the country are already overwhelmed with cases, keeping justice help up for months or even years. 


The current case was started when an Italian restaurant was upset over the fees associated with every transaction charged on an American Express card.  American Express charges per transaction, and the fees associated with those charges are higher than MasterCard or Visa.  The merchants alleged antitrust violations, and the agreement between the restaurant and American Express outlined that cases were to be submitted individually through arbitration.  Justice Scalia stated that an individual arbitration requirement was not necessarily a bar to other claims but rather a limitation on the pursuit of claims.  The Supreme Court overruled the Second Circuit decision to rule in favor of the merchants.