Editorial: Arbitration is the privatization of the Judicial System
Wednesday, 31 January 2007
The deck is stacked against homebuyers
The danger is that an arbitrator has the power of a Supreme Court Justice since arbitration decisions are final and can not be appealed. For the past 10 years this consumer abusive system has been exploited by the homebuilding industry to avoid all warranty responsibility for defectively built homes.
Editorial: The deck is stacked against homebuyers
By Janet Ahmad
Arbitration is the privatization of the Judicial System. The danger is that an arbitrator has the power of a Supreme Court Justice since arbitration decisions are final and can not be appealed. For the past 15 years this consumer abusive system has been exploited by the homebuilding industry to avoid all warranty responsibility for defectively built homes.
It all began in 1994 when the National Assoc. of Home Builder (NAHB) and the American Arbitration Association (AAA) entered into a joint venture to write arbitration rules and builders put arbitration clauses in their contracts. American Arbitration Association records the history: In June 1994, the AAA created the Construction ADR Task Force, comprised of 55 representatives of the construction industry and it advocates. The mission of the Task Force was to undertake a comprehensive review of the AAAs Construction Dispute Avoidance, Management and Resolution Services, including rules, administrative policies, panels, binding and non-binding forms of ADR, education and training programs, and outreach, with a goal of improving AAA services and helping the AAA be more responsive to the needs of the construction industry.
For the past 15 years NAHBs members have continued to supply AAA business with excessively expensive binding arbitration services while homebuilders consistently received favorable binding arbitration decisions from AAA. Construction Arbitration Services (CAS) is the fastest growing binding arbitration service company whose solo purpose is to resolve construction disputes for the homebuilding industry. CAS has close ties with the largest 3rd party home warranty companies whose records documented denial rates as high as 86% of all claims. Due to repeat homebuilder business homeowners inevitably lose.
Binding Arbitration Is Not Consumer Friendly
- High Cost of Arbitration.
- Non-disclosure of high costs associated with Privitized Court.
- Creates Unfair Bargaining Position.
- Creates Un-level Playing Field.
- The Builder has
- Creates an environment for Bias because of repeat builder customers.
- Binding Arbitration Decisions are Non-Appealable.
- Courts Upheld - Arbitration Decisions can result in Non Compliance with State Law.
- Courts Upheld - Arbitrators can misinterpret the terms of Contractual Agreements.
- Arbitration Confidentiality. No Public Record.
- Limits the Consumer to Only One Dispute Resolution.