Policing Contracts for Unconscionability: Guidelines for International Arbitrators Subject to the Scrutiny of US Courts


This article is about what courts in the United States take into account when determining whether a term or agreement is unconscionable, i.e. unduly harsh, inflexible, grossly unfair or one-sided, and how these rules compare with those applied throughout the rest of the world. Familiarity with the subject is essential if an arbitrator’s performance and award are subject to the scrutiny of a court in the United States.

Arbitrators familiar with civil law systems who have to rule on unconscionability need to understand that they possess a broad discretionary power that is unstructured and fluid.

But there are some limits. Also readers from other common law countries need to appreciate how different the US approach is from their own. Finally, American arbitrators need to be mindful that, if called upon to apply the laws of virtually any jurisdiction outside the United States other than Australia and perhaps Canada, the US scheme for policing the validity of private contracts is not applicable.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Paul Marrow, Paul Bennett Marrow, Attorney/Arbitrator | Attorney Advertising

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