Beyong Reproach: Has the Doctrine of Arbitral Immunity Been Extended Too Far for Arbitration Sponsoring Firms?

Abstract

With the increase of mandatory arbitration agreements in consumer contracts, private arbitration firms emerged to administer arbitration proceedings between consumers, credit card companies, financial institutions, and debt-collection entities. Because of the enormous market for consumer arbitration services, firms have strong financial incentives to ensure clients remain satisfied with their services. Despite conflict of interest concerns, lawsuits alleging that firms violated ethical and contractual obligations to provide neutral arbitration proceedings have been largely unsuccessful because firms escape liability under the doctrine of arbitral immunity. After providing a history of arbitral immunity, this Note focuses on a novel approach taken by San Francisco City Attorney Dennis Herrera that challenges a firm’s immunity on the grounds that the city is acting in a civil law enforcement capacity and only seeking equitable relief. This Note discusses the merits of San Francisco’s approach, its possible replication in other states, and the ultimate need for comprehensive legislative reform.