Consumer Arbitration in the EU: A Forced Marriage with Incompatible Expectations

Piers, Maud

doi:10.1093/jnlids/idq017

Cited by 7 publications

(2 citation statements)

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“…The European Union (EU) took a different approach from the USA. Along with a EU's legislative restriction (the EU ADR-directive 2013/11) on the arbitration of consumer disputes, the Court of Justice of the European Union has ruled in several cases that the public policy of consumer protection supersedes public policy of enforceability of arbitration agreements (Reich, 2015;Piers, 2011).…”

Section: Theory and Hypothesesmentioning

confidence: 99%

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Justice in arbitration: the consumer perspective

Ghodoosi

Sharif

2021

IJCMA

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Purpose Arbitration – a binding private third-party adjudication – has been the primary legal way for resolution of consumer disputes. Consumers, however, rarely use arbitration to resolve their disputes while evidence suggests that their disputes remain unresolved. Contrary to the current prevailing emphasis on who is winning in arbitration, this study aims to establish that consumers believe that the court is more just than arbitration, regardless of the outcome. This study further establishes that consumers’ perceived poor legitimacy and lack of familiarity, not cost calculation, are what drive their justice perception. Design/methodology/approach In three experimental studies, participants were presented with scenarios in which they were to envision themselves amid a consumer dispute. The scenarios were followed by survey questions that examined individuals’ perceptions of justice. Three mediating variables of legitimacy, cost and familiarity were also examined. Findings The results suggest that consumers hold a high perception of justice for court as opposed to arbitration. Even though a favorable outcome increases consumers’ perception of justice, the results suggest that consumers find courts to be fairer regardless of the outcome. Familiarity and legitimacy mediate this relationship, not cost. Originality/value Current research does not provide an adequate explanation for consumers’ underutilization of arbitration nor does it focus on correct factors. Studies in psychology and law primarily focus on ex post feelings of individuals after dispute resolution, ex post favorable outcomes and ex ante cost–benefit analysis. To the best of the authors’ knowledge, the present study for the first time analyzes ex ante consumer perception of justice.

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Section: Theory and Hypothesesmentioning

confidence: 99%

“…Arbitration is also common in consumer contracts in other jurisdictions including Europe, but the courts have limited its usage in the pre-dispute phase (i.e. mandatory arbitration) (Mani, 2019;Piers, 2011) The focus of this paper is on mandatory arbitration in the USA.…”

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confidence: 99%