In recent years, mass arbitration has emerged as a novel and often controversial tool within United States (U.S.) domestic arbitration. These proceedings occur when a large number of similar individual claims are filed against the same respondent, often a large corporation, creating a high-stakes environment where respondents are forced to either pay substantial administrative fees or settle. This rise of mass arbitration has been particularly driven by the increasing use of arbitration clauses that include waivers of class action rights, a trend sanctioned by the U.S. Supreme Court in 2011. While this practice has gained significant traction in the U.S., one pressing question remains: could mass arbitration be applied successfully in international arbitration?
note explores the evolution and key characteristics of mass arbitrations, examining how they have taken shape within the U.S. legal landscape. It also considers whether this phenomenon could find a place in international arbitration, addressing potential hurdles such as institutional limitations, non-arbitrability of certain claims under foreign legal systems, and the feasibility of applying mass arbitration frameworks in investor-State disputes. By analyzing the current state of mass arbitration in the U.S. and the unique challenges it would face internationally, this note seeks to understand whether mass arbitrations could potentially change global dispute resolution or remain a practice limited to domestic cases.
The Evolution of Mass Arbitration
As indicated above, mass arbitrations are a relatively new phenomenon, emerging only in the 2010s, specifically in response to the American legal system's acceptance of class action waivers in consumer contracts.
Before this, defendant companies in the U.S. had tried for years to find ways to escape expensive class action lawsuits initiated by consumers and employees. Eventually, companies turned to arbitration clauses containing waivers of class action suits in the hopes that ordinary claimants would be unable to pay for arbitration, effectively forcing them to drop their claims.1 Arbitration also offered companies additional benefits in the event that claimants managed to bring their claims, like limiting claimants' opportunities for discovery and appeal while keeping any claims of fraud or bad behaviour confidential.2
However, there was still a question as to the legality of such class action waivers until the Supreme Court sanctioned this approach in its 2011 landmark decision, AT&T Mobility LLC v. Concepcion.3
In this case, respondents filed a complaint against AT&T Mobility LLC (AT&T), which was later consolidated with a proposed class action, claiming AT&T had engaged in false advertising and fraud by charging sales tax on phones advertised as free.4 AT&T sought to compel arbitration based on the terms of its contract, but the respondents opposed this, arguing that the arbitration agreement was unconscionable and unlawfully exculpatory under California law due to its prohibition on classwide procedures.5 The district court sided with the respondents, and the Ninth Circuit upheld the decision.6 The central issue was whether the Federal Arbitration Act (the "FAA"), which provides the federal legal framework for the enforcement of arbitration agreements in the United States, preempted California's restriction on class action waivers.7
The U.S. Supreme Court ruled in the affirmative and found that the restriction on class action waivers conflicted with the FAA because it obstructed the objective of federal arbitration law, which is to ensure the enforcement of arbitration agreements according to their terms so as to facilitate informal, streamlined proceedings.8 The Supreme Court reversed the Ninth Circuit's decision and remanded for further proceedings, thereby affirming the FAA's preemption of state laws limiting class action waivers in arbitration agreements.9
However, as the FAA provides that an arbitration agreement "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract", it is still possible for contracts containing class action waivers to be found unconscionable under certain circumstances, as unconscionability is a common law defence to the enforceability of contracts.10 To avoid such challenges, many companies began including "friendly" fee-shifting provisions in their contracts alongside the class action waivers, committing the companies to pay all or part of a claimant's arbitration filing fees – still on the assumption that even with the initial fees covered, ordinary claimants would be financially unable to pursue their claims through arbitration.11
To the dismay of companies, however, this created conditions that were ripe for mass arbitration to emerge as a counterattack to forced arbitration. Highly capitalized attorneys – not the "ordinary" claimants expected by companies – who found that the fee-shifting provisions mitigated risk and economically incentivized mass arbitration, began filing claims on behalf of hundreds or thousands of individual claimants against the same respondent for similar conduct, forcing them to choose between paying exorbitant amounts in filing fees (often several thousand dollars per claimant) or settling the case.12
Mass Arbitration: Pros and Cons
Naturally, the advent of mass arbitrations in the United States has led to intense debate over the benefits and drawbacks of its use.
On the one hand, mass arbitrations have been praised as a way for individuals who have been deprived of class actions to overcome the prohibitively high costs of arbitration against companies seeking to avoid justice for their abuses. This is particularly true as the number of individuals who benefit from settlements can be even greater than the number filing claims in arbitration. For example, in 2024, after facing arbitration claims from over 100,000 consumers for alleged violations of the Illinois Biometric Information Privacy Act through the Instagram app, Meta agreed to a USD 64.5 million settlement for 4 million consumers.13 In 2022, Snap, Inc. concluded a USD 35 million settlement for similar violations against 3 million consumers after it faced over 10,000 arbitration claims.14
On the other hand, the practice of mass arbitration is the subject of severe criticism. Commentators warn that mass arbitrations can be (and have been) easily abused by plaintiffs' lawyers.15 Plaintiffs' lawyers may initiate mass filings of meritless or frivolous claims to force companies into paying settlements simply to avoid millions of dollars of arbitration fees, thereby coercing said companies into removing arbitration agreements from their contracts altogether.16 Mass arbitration has thus been called "the latest plaintiff-lawyer strategy to try to eliminate arbitration." 17
Interestingly – and somewhat ironically – this seems to be the exact opposite of what the companies themselves had hoped for when forcing their customers and employees to arbitrate – that individuals would be forced to choose between paying for costly arbitration or dropping their claims, regardless of the...
