Wednesday, March 30, 2011
Arbitration Jeopardized by Bill
The Senate Judicial Proceedings Committee heard legislation that would prohibit a written agreement made between two parties before a dispute arises from having the effect of waiving the rights of a party to participate as a member of a class action. The bill would apply retroactively, so it would apply to all agreements in effect at the time the bill is enacted.
The bill, HB 729, was overwhelmingly passed by the House of Delegates last week and could move to the Senate floor any day. Maryland Chamber Vice President of Government Affairs Ron Wineholt opposed the legislation during this week’s Senate hearing. “In attempting to overturn provisions common to millions of commercial transactions annually in Maryland, the bill would harm the interests of consumers and businesses in our state,” Wineholt said.
Many Maryland Chamber members include arbitration provisions in their commercial contracts because it provides the consumer and the company an efficient means of resolving disputes without going to court. If customers are allowed to engage in class actions despite a contractual requirement for arbitration, companies will abandon arbitration as a means of resolving disputes with customers. Such a result will mean more cost and litigation for all parties when disputes arise.
This bill would damage Maryland’s business climate. No other state has enacted a law invalidating class action waivers. If enacted, Maryland would draw national attention for actions that damage its business climate. To learn more about this legislation, and why the Chamber opposes it, read the Chamber’s complete position statement here.
For more information, contact Ron Wineholt at .(JavaScript must be enabled to view this email address).
