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Auto Dealers Back Voluntary Binding Arbitration

10 March 1999

Auto Dealers Back Voluntary Binding Arbitration

    WASHINGTON, March 9 -- The National Automobile Dealers
Association today reiterated its support for recently introduced legislation
that would preserve the rights of automobile dealers and some other franchise
owners in disputes with product manufacturers.
    "Mandatory binding arbitration clauses in non-negotiated contracts are
fundamentally unfair," said NADA Chairman James A. Willingham.  "Dealers
should never be forced to sign away their rights under state laws or be denied
access to courts or state alternative dispute resolution forums to obtain or
keep franchises."
    Rep. Mary Bono (R-Calif.), a House Judiciary Committee member, introduced
the "Fairness and Voluntary Arbitration Act," H.R. 534.  Reps. Martin Frost
(D-Tex.) and Virgil H. Goode Jr. (D-Va.) are cosponsors.  The proposal would
significantly limit the impact of non-negotiable clauses in franchise
agreements that require automobile dealers to settle disputes through binding
arbitration.  The bill would make arbitration voluntary by granting each party
to the contract the right to accept or reject arbitration as a means of
settling each dispute.
    "Without the legislation," Willingham says, "manufacturers can circumvent
the important protections provided to dealers under state laws."
    The National Automobile Dealers Association represents more than 19,500
franchised new-car and -truck dealers holding nearly 40,000 separate
franchises, domestic and import.