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June 20, 2013

Court Again Upholds Arbitration

In a 5-3 decision, the Supreme Court ruled that a lower court cannot overturn an arbitration agreement containing a class action waiver, even when the potential recovery is far less than the potential cost of pursuing the claim.

“The Federal Arbitration Act does not permit courts to invalidate a contractual waiver of class arbitration on the ground that the plaintiff’s cost of individually arbitrating a federal statutory claim exceeds the potential Recovery,” states the majority opinion

The court has repeatedly affirmed the use of arbitration clauses in contracts, which have increasingly been relied on to settle disputes, reports ThomsonReuters. 

As courts have become more crowded, arbitration has emerged as a less expensive and less time consuming alternative to litigation, which can take years to move through the legal system.

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