Thursday, 10 January 2013

Are some consumers more equal than others?

In case of a dispute arising from a contract you concluded as a consumer, would you (and: should you) want to have your day in court? Or can your interests be served equally well or maybe even better in arbitration proceedings?

In a recent working paper on 'Arbitration and Access to Justice', Omri Ben-Shahar (University of Chicago Law School) addresses these questions from a law & economics perspective. On the basis of examples concerning product liability, health care, information duties and accommodations for disabilities, he argues that in certain circumstances 'open access' policies may unintentionally have the effect of poor, less sophisticated consumers subsidising access to justice for wealthier consumers. This may be the case if:

'(1) Wealthier sub-groups [of consumers] are more likely to enjoy the benefits of open access; and
(2) Poorer sub-groups pay a share for the funding of the open access that exceeds their proportional benefits.'

The overall results are summarised as follows:

'Mandatory arbitration clauses in consumer contracts are widely regarded as problematic because they limit consumer’s access to judicial forums, to fair procedures, and potentially to any kind of remedy. But rather than looking at consumers as a group, I examine which sub groups of consumers are affected by this limitation more than others. I argue that in most circumstances, access to courts benefits the elite, not the weak. It is a species of open-access policy that has an unintended regressive effect. Paradoxically, rules that limit the use of pre-dispute arbitrations clauses hurt, rather than protect, weaker consumers, as they mandate a regressive reallocation. I also consider the role of class actions, and whether weak consumers are potentially the indirect beneficiaries of class action litigation. This argument has theoretical merit, but it, too, is limited in ways that are often unappreciated.'

The paper offers a very interesting and refreshing view on, in Ben-Shahar's words, the 'seductive logic of the access-to-justice advocacy'. This is of importance for European consumers, too, for instance with regard to the proposal for a Common European Sales Law. As regards the EU context, nevertheless, the conclusion of the paper puzzles me somewhat, insofar as it criticises the 'access justice' model for European private law proposed by Hans Micklitz. If 'access justice' (not to be confused with 'access to justice') is understood as aiming at creating a legal framework that provides weaker consumers with real possibilities to participate in the European internal market, then I have difficulty seeing why a well-designed law of remedies reflecting this concept of justice would necessarily be at odds with Ben-Shahar's conclusions. This is of course not to say that the current practice of European consumer law complies with theoretical insights in all respects... As for mandatory arbitration proceedings for consumers, however, I think that for instance the CJEU's preliminary ruling in the Alassini case might be considered to be in line with both the economic and social justice arguments named here, as well as with fundamental rights argumentation

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