Private Law Theory

ABSTRACT
While legal scholars debate the merits of mandatory arbitration, a more insidious barrier to justice has quietly proliferated beneath their radar. I call that barrier ‘pre-arbitral red tape’ – that is, procedural condition precedents to initiating arbitration in a pre-dispute agreement between a consumer and a business or between a worker and an employer. For example, new hires may be required to sign a contract agreeing that, if they ever have a dispute with their employer, they must successively attempt to resolve it with their supervisor, the human resources department, and a mediator before they can initiate arbitration. Or consumers buying a product or service may be forced to sign a contract agreeing that, if they ever have a dispute with the seller, they must notify it of their dispute alongside a demand for relief and calculation of damages, wait a few months, and personally attend a conference with the seller to attempt to negotiate a resolution before they can initiate arbitration.

Drawing on an empirical analysis of template agreements from Fortune 500 companies, this Article reveals the aggressive character of these arbitration gatekeeping provisions. After mapping the complex legal landscape governing such terms – most notably, the Federal Arbitration Act of 1925 (‘FAA’) – it conducts a comprehensive assessment of their legality. This assessment examines contract formation and enforceability under state law, federal preemption, the delegation of pre-arbitral red tape to the arbitrator, the effects of declining to toll the applicable statutes of limitations during pre-arbitral procedures, and the applicability of severability doctrines. Most significantly, it concludes that pre-arbitral red tape is not only a distinct and under-theorized barrier to justice, but that federal law preempts state laws that would enforce pre-arbitral red tape in FAA-governed agreements. Finally, it considers the implications of these analyses for key stakeholders, resolving that state legislatures and arbitration providers are best situated to combat pre-arbitral red tape. In conclusion, this Article finds that aggressive forms of pre-arbitral red tape have become commonplace in consumer and employment arbitration agreements, subverting access to justice and the FAA’s central goal of prompt and streamlined arbitration, thereby raising the import of stymying their proliferation.

Nelson, Ryan, Pre-Arbitral Red Tape (March 1, 2026).