Alternative dispute resolution (ADR) provides a powerful alternative to going to court. It saves time and money, and can resolve disputes amicably while keeping the results of the decision out of public records.

ADR generally employs either mediation or arbitration to resolve disputes. In mediation, the parties are assigned a “mediator” who helps them reach an agreement. Arbitration works more like a traditional litigation in that the parties present their case to a neutral third party who renders a decision that favors one of the litigants.

What is Forced Arbitration?

At Smiley Law we encourage clients to consider whether ADR can help their case. When it comes to forced arbitration, however, there is no choice to be made. A forced arbitration clause (also known as “mandatory arbitration”) requires you to waive certain legal rights against the person or entity you are dealing with.

These clauses are typically found in the following kinds of documents and contracts:

  • Credit card agreements.
  • Banking and investment account agreements.
  • Insurance policies and contracts.
  • Construction contracts.
  • Employment contracts.
  • Terms of service agreements for consumer goods.

Often people do not realize that engaging in any of the above relationships or activities means that you agree to the related contract, which likely contains a forced arbitration clause. To make matters worse, forced arbitration decisions are usually binding, meaning that once the arbitrator decides the outcome you are left with no options for legal recourse.

Alternative Dispute Resolution in Louisiana

Louisiana state and federal courts tend to uphold binding arbitration decisions, even where mistakes have been made in the process. The Supreme Court of Louisiana said in Hodges v. Reasonover (2012), a case about binding arbitration in aretainer agreement:

“[E]rrors of fact or law do not invalidate a fair and honest arbitration award.” Nat’l Tea Co. v.Richmond,548 So.2d 930, 932 (La. 1989)., 548 So.2d 930, 932 (La. 1989). Instead, since the parties have agreed to arbitration as the preferred method of resolving their dispute, they are presumed to have accepted the risk of procedural and substantive mistakes of either fact or law.

This comment by the Supreme Court of Louisiana shows just how difficult it can be to
preserve your rights in any dispute about an arbitration decision.

The best thing you can do when facing arbitration is to know what you are up against. At Smiley Law, we work with clients to help them understand and protect their legal rights. If you need guidance for a matter involving arbitration or any kind of alternative dispute resolution, then the experienced New Orleans attorneys at Smiley Law can help. Contact us today for an initial consultation.

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Seth Smiley
Seth is an attorney licensed to practice in Louisiana and California. He is the owner and lead attorney at Smiley Law Firm. To speak with Seth fill out the form on this page.
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