First Things First: What is Arbitration Again?

Before we dig into whether arbitrators are truly neutral, let’s set the stage:

• Arbitration is a private legal process that happens outside of the traditional court system. Instead of a judge in a public courtroom, a neutral third party (called an arbitrator) decides the case.

• Mass Arbitration is when hundreds or even thousands of individuals file arbitration claims at the same time. This isn’t the same as a class action lawsuit — each claim is still technically an individual case, but the collective scale shifts the balance of power. (Curious? Learn more with Chariot’s Mass Arbitration 101).

💡 Want to explore other terms you might run across? Check out our Glossary.

The Myth of the Neutral Referee

On paper, arbitration is described as a fair and balanced process. The arbitrator is meant to act like a referee — no bias, no favoritism, just a decision based on the facts.

Companies often promote arbitration this way, framing it as a simpler, faster, and more neutral alternative to court. But here’s the problem: the system is not always as neutral as it sounds. And it all comes down to one powerful factor — money.

Why Incentives Matter

Like any job, arbitrators get paid for their work. But…who pays them?

In most cases, it’s the company being sued (aka the defendant) 🤔. This creates an obvious tension. If an arbitrator issues rulings that companies dislike too often, those companies might not choose them (or their arbitration service provider) again.

Arbitration organizations like AAA or JAMS compete for corporate clients. If their arbitrators are seen as “unfriendly” to businesses, they risk losing cases and revenue. This dynamic builds in subtle incentives that can tilt the process toward repeat corporate players.

Arbitrators and providers have every reason to keep the paying customer satisfied, and in arbitration, that customer is usually the corporation.

Why This Puts Consumers at a Disadvantage

• The repeat-player effect: Corporations face arbitration frequently. Individual consumers usually don’t. Arbitrators know which side is likely to return with future cases.

• Subtle bias over time: Even small, unconscious tilts toward corporations can accumulate and change outcomes.

• Limited oversight: Unlike judges in public courts, arbitrators aren’t appointed or elected by any kind of democratically accountable procedure, don’t face public scrutiny, and their decisions are exceptionally difficult to appeal.

So while arbitration might look like a level playing field, the system often favors the “house.”

How Consumers Can Push Back

The truth is, arbitrators don’t always operate as neutral referees. Built-in financial incentives often tilt the process toward corporations that appear repeatedly in arbitration.

Mass arbitration helps give consumers some power back. When thousands of consumers file claims at once, it creates the kind of pressure that makes companies less confident about relying on the "home field" advantage that they have traditionally believed that arbitration provides them and more willing to come to the negotiating table and take resolving their wrongdoing through settlement seriously.

👉 Curious if you qualify for a mass arbitration case? Check your eligibility at app.chariotclaims.com.