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National Association of Dealer Counsel Opposes Automobile Arbitration Fairness Act of 2008

April 3, 2008

Hanover, Md. — The National Association of Dealer Counsel (NADC) Board of Directors has submitted written comments to the House Judiciary Committee to express opposition to the Automobile Arbitration Fairness Act of 2008 (H.R. 5312).

The March 17 letter signed by NADC President Michael Charapp challenged the assumption underlying the legislation that motor vehicle dealers routinely use predispute arbitration clauses because arbitration favors dealers. In fact, NADC’s members, who are primarily lawyers for dealers, have widely divergent opinions on the benefits of arbitration. While some NADC members believe that arbitration’s streamlined processes are beneficial, other NADC members believe that arbitration is more expensive than litigation and yields decisions that are not as solidly grounded in legal precedent.

In the letter, NADC said, "Parties to an agreement that is not an adhesion contract like a motor vehicle franchisor sales and service agreement should have the right to determine the method of resolving disputes." The board decided to go on record with the letter to support the needs of the members' clients, motor vehicle dealerships. The letter went on to note that active judicial review of arbitration provisions has led those dealers who choose to include predispute arbitration terms in their agreements to use language that tends to be scrupulously fair to both dealers and consumers.

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