Binding Arbitration

A dispute resolution process where parties agree to submit their conflicts to a neutral arbitrator whose decision is final and legally enforceable, with limited grounds for appeal. In privacy policies and terms of service, binding arbitration clauses require users to resolve disputes through arbitration rather than court litigation, and the arbitrator's decision is binding on both parties. These clauses are particularly controversial because they often include class action waivers, preventing users from joining together in lawsuits over widespread harms like data breaches. Some jurisdictions restrict binding arbitration clauses in consumer contracts. When including binding arbitration provisions, clearly disclose that users waive their right to sue in court, explain the arbitration process, identify the arbitration organization that will administer proceedings, and consider allowing opt-out periods. Consumer protection laws may limit enforceability of binding arbitration clauses.