[Congressional Record Volume 146, Number 124 (Friday, October 6, 2000)]
[Extensions of Remarks]
[Pages E1718-E1719]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


   MOTOR VEHICLE FRANCHISE CONTRACT ARBITRATION FAIRNESS ACT OF 2000

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                               speech of

                            HON. KEN BENTSEN

                                of texas

                    in the house of representatives

                        Tuesday, October 3, 2000

  Mr. BENTSEN. Mr. Speaker, I rise in strong support of legislation I 
cosponsored, H.R. 534, the Fairness and Voluntary Arbitration Act. This 
important legislation addresses an imbalance in the relationship 
between automobile manufacturers and automobile dealers.
  Today, motor vehicle manufacturers regularly force small business 
auto and truck dealers into mandatory binding arbitration clauses by 
including the clauses in non-negotiated dealer agreements. Under the 
current system, automobile and truck dealers have no choice but to 
accept mandatory binding arbitration provisions in franchise agreements 
provided by motor vehicle manufacturers. These ``take it or leave it'' 
contracts undermine the ``freedom to contract,'' a tenet of modern 
commercial law, and run counter to basic principles of fairness.
  H.R. 534 would make arbitration of dealer-manufacturer disputes 
totally voluntary. H.R. 534 does not prohibit arbitration but rather 
seeks to make arbitration one of several avenues to dispute resolution. 
H.R. 534 makes arbitration one of several fair choices that both

[[Page E1719]]

parties may willingly and knowingly select. I believe that we should 
reject the one-size-fits-all approach of arbitration and recognize that 
there are less expensive, more efficient, non-judicial modes of dispute 
resolution like mediation and other types of informal negotiation.
  Under the current system, legitimate state protections are 
unavailable for dealers because of overly broad federal policy favoring 
arbitration. The landmark Supreme Court case, Southland Corporation v. 
Keating, 107 S. Ct. 852 (1984), established that federal law preempts 
state laws that prohibit mandatory binding arbitration in adhesion 
contracts or prohibit waivers of judicial or administrative remedies of 
a contract. Preemption prevents states from enforcing protective laws 
that limit or regulate unfair arbitration practices in contracts, 
despite the fact that enforceability of private contracts is ordinarily 
a question of state law. These arbitration clauses substantially 
deteriorate dealers' rights and remedies as provided under protective 
state franchise laws.
  Mr. Speaker, the federal government has no business dictating the 
terms of contracts between small business auto and truck dealers and 
automotive manufacturers. Accordingly, I urge my colleagues to join me 
in support of H.R. 534, legislation to untie the hands of small 
business auto and truck dealers in their negotiations with automotive 
manufacturers.

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