Transportation Law Hub

According to a 2018 report by the U.S. Chamber Institute for Legal Reform, the United States is, by far, the most litigious society in the world. The report, which is based on 2016 statistics, indicates that we spend about 2.3% of gross domestic product, roughly $429 billion a year, or about $2,000 for each house hold in the country, on tort litigation.

Since this report was published, these costs have likely continued to rise.

Not only does an insurer face litigation costs, there is the uncertainty of a potentially unfavorable venue or a complicated defense that is not ideal for the trial courts.

There is an alternative: arbitration.

In Century Plastics, LLC v Frimo, Inc, unpublished opinion of the Court of Appeals, issued Jan. 30 (Docket No. 347535), 2020 WL 504977, the appellate court affirmed the circuit court’s granting of summary disposition for defendant on the basis the parties had an agreement to arbitrate.

“Defendant having incorporated the General Terms into the parties’ contract, under the unambiguous language of this provision, defendant had the power to compel arbitration of disputes arising under the contract. Plaintiff assented to the terms of the price quotation, and it did not raise any concerns” as to the applicability of the General Terms.

Insurers should review their terms and conditions of their policy and consider whether to remove a more costly lawsuit from an unfavorable, plaintiff-friendly venue and place it into arbitration, where the fact-finder arbitrator may be more well-informed as to the law, and can then apply them to the facts of whatever dispute arises between the parties, and can likely do so more efficiently.

As Benjamin Franklin said, “When will mankind be convinced and agree to settle their difficulties by arbitration?” With more and more lawsuits being filed, that time may be now.