I get asked this question quite a bit, and the answer is a resounding, “Yes.” The U.S. Supreme Court and the Minnesota Supreme Court have both repeatedly said that clauses requiring arbitration and forbidding a party from going to court are enforceable.

Most recently, this was seen in the case where high risk consumer borrowers, i.e. people using credit cards who have bad credit, sued under a federal law that expressly gives them a right to sue. The credit card companies defended by saying the arbitration clauses in their credit agreements mean that the consumers can no longer go to court and must arbitrate. Unsurprisingly to me, the U.S. Supreme Court agreed with the credit card companies.

I say this is unsurprising because this has been the result repeatedly in litigation all over the country. As a result, many contracts are now mandating arbitration and include waivers of the parties’ right to sue.

Given that the courts have repeatedly found for many years now that arbitration clauses are enforceable and constitute a waiver of the parties’ right to sue, it is imperative that parties learn what is in the contract before agreeing to it. Once the document is signed, it is too late to contest the arbitration clause in case you want to go court.

Leave a Reply

Your email address will not be published. Required fields are marked *