Chuck Grassley: “today, I am joined by my colleague from Wisconsin, Senator Feingold, in introducing the Motor Vehicle Franchise Contract…”

“today, I am joined by my colleague from Wisconsin, Senator Feingold, in introducing the Motor Vehicle Franchise Contract Arbitration Fairness Act of 1998. As the Senate's leading advocate of ADR or alternative dispute resolution, I have attempted to facilitate the use of ADR in a number of ways. In the last Congress, we enacted my legislation to make permanent the use of ADR with and among our federal agencies. This year, we are attempting to enact legislation authorizing federal court-annexed ADR. A small percentage of ADR cases involves the use of binding arbitration. In dealing with arbitration, I have tried to emphasize the use of voluntary, rather than mandatory arbitration. Both parties must agree to voluntary arbitration, whereas mandatory arbitration can be forced upon a party, as in the case of some contractual arrangements. The authorization and use of mandatory arbitration has to be carefully considered since the right to trial may be limited or even forfeited. One such arrangement can be found in some contracts between automobile or truck dealers and manufacturers. In these contracts, dealers are given a 'take it or leave it' clause that forces them to agree to binding arbitration. There is no real bargaining. If the dealer wants the contract, he or she has to agree to the mandatory arbitration clause. A number of states have enacted laws to prevent these types of unfair contracts.”