The D.C. Court of Appeals has ruled that under District law, a decision enforcing an arbitration clause is immediately appealable. This ruling, based on a D.C. arbitration reform law from 2007, corrects a pro-arbitration imbalance that had previously existed in the District and continues to exist in most jurisdictions: the denial of a motion to compel arbitration is immediately appealable, but if arbitration is granted, the consumer has to go all the way through the arbitration to which they are objecting before exercising a right to appeal.
The right to appeal early is a powerful one, because timing can effect the parties' incentives to settle and what costs they have to pay while waiting for their appellate rights to ripen.
In this case, the D.C. court "recognized the potential for widespread use of adhesion contracts containing arbitration agreements to deprive consumers of any meaningful choice, which raises serious questions about the fairness of enforcing the terms of those contracts against consumers." Thus, forcing consumers into arbitration is a significant step with potentially deleterious consequences:
[A]rbitration can be costly and time-consuming, and does not afford the consumer the same process as the courts. . . . [J]udicial review of arbitration agreements—including the substantive fairness of those agreements—is extremely limited, both at the trial court level as well as on appellate review. Thus, we are satisfied that the current and frequent inclusion of arbitration clauses in consumer contracts of adhesion justifies our conclusion that a consumer compelled to arbitrate with a commercial entity pursuant to such a clause suffers significant injury . . . such that an order compelling arbitration in this context operates as an order granting an injunction and necessitates our immediate, interlocutory review . . . .
(citations and footnote omitted).
Let's hope other jurisdictions follow D.C.'s lead.
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