We're examining the implementation of arbitration in the 2018 ToS update

I'm going to repeat and expand upon what I said over on the other post:

Arbitration clauses in clickwrap terms-of-service contracts are inherently abusive. An opt-out is not good enough. You should not have this clause at all in the terms of service applied to the general public. (I don't care whether you put it in the default terms of service for Teams, or for employers seeking to use the Careers service, since I presume that those remain negotiable in advance by actual lawyers on both sides.)

The practical function of an arbitration clause in a clickwrap terms of service document is to immunize the company (Stack Exchange, in this case) from class-action lawsuits. Given that all community use of the SE website family involves no money changing hands either way, the only reason we should expect anyone to file a class-action lawsuit against Stack Exchange is if you commit some sort of massive privacy violation or copyright infringement. I imagine you would never do such a thing, yes? But then you have no reason to need an arbitration clause, yes? So you should be willing to take it out, yes?

And if you're not willing to take it out, why should I believe your assurances that you will never sell all our private data to scammers?

You wrote in the original announcement

Arbitration is pretty standard for free online products, [...]

While forced arbitration agreements seem to be increasingly popular in the US, I don't think they're as common as this sentence seems to imply. I checked a few Terms of Service for products that match this description (the first popular ones that came to mind, not truly a random selection):

No arbitration clause:

• Twitter
• Github
• Reddit
• Slack
• Google
• Facebook
• Wikipedia

Arbitration clause:

• Gitlab (arbitration in the Netherlands)
• Instagram

My selection is certainly not random, but it does at least indicate that arbitration isn't universal for free online products. So I am wondering why SE does suddenly need it, and many other online services manage to do fine without it.

I have no plans to sue SE, but I'm very concerned that the new TOS attempts to apply the arbitration clause to "ALL DISPUTES BETWEEN YOU AND STACK OVERFLOW", no matter who initiated the dispute or who is demanding something from the other side.

By its plain meaning, this would allow SE to suddenly decide they want money from me and sue me on some trumped-up charges in their own private court, knowing that it would be cheaper for me to roll over and pay up than to hire an American lawyer to defend me (and that is assuming I could even get a fair hearing in a forum that SE has unilaterally selected, which I doubt).

It would be a lot more palatable (at least to me; can't speak for others) if the clause only covered disputes where I demand something from SE.

Along with the mandatory arbitration clause, the new Terms of Service would seem to have a mandatory gag order about any and all arbitration cases:

You agree that, notwithstanding anything in the foregoing, any arbitration proceeding between you and us will be conducted in New York, NY, USA, that the language of the arbitration shall be in English, and that all arbitration proceedings shall be considered confidential in nature.

Hypothetically, if at some time in the future, Stack Overflow were taken over by less ethical management who decide to start slapping users with arbitration cases for revenue-related reasons, does this mean we won't even be able to warn other users about it? Recently mandatory confidentiality clauses associated with mandatory arbitration clauses have been in the news for helping to enable harassment (example 1, example 2, example 3), which shows one way that the mandatory arbitration + confidentiality pairing can be used in predatory ways. And of course forced secrecy cuts against the Stack Exchange network's current culture of openness and mission to provide answers to all sorts of questions.

What is the justification for this mandatory confidentiality order, especially in hypothetical future cases where the Stack Exchange network (or its successors) brings action against an end user, rather than vice versa?

I suspect the unilateral carve-out for IP violations in your arbitration clause may violate Jams's Consumer Arbitration Minimum Standards. The Consumer Arbitration Minimum Standards say that

1. The arbitration agreement must be reciprocally binding on all parties such that (a) if a consumer is required to arbitrate his or her claims or all claims of a certain type, the company is so bound; and, (b) no party shall be precluded from seeking remedies in small claims court for disputes or claims within the scope of its jurisdiction.

Your arbitration clause says that

[...] TO THE EXTENT THAT YOU HAVE IN ANY MANNER VIOLATED OR THREATENED TO VIOLATE OUR INTELLECTUAL PROPERTY RIGHTS, WE MAY SEEK INJUNCTIVE OR OTHER APPROPRIATE RELIEF IN ANY STATE OR FEDERAL COURT IN THE STATE OF NEW YORK.

This lets you avoid arbitration in cases where we cannot. I am not sure whether the small claims alternative or some other clause makes this okay; the small claims alternative is limited, most obviously because small claims court can only handle small claims.

The arbitration clause won't hold for any visitors from Europe.

http://www.privacy-regulation.eu/en/article-77-right-to-lodge-a-complaint-with-a-supervisory-authority-GDPR.htm

Without prejudice to any other administrative or judicial remedy, every data subject shall have the right to lodge a complaint with a supervisory authority, in particular in the Member State of his or her habitual residence, place of work or place of the alleged infringement if the data subject considers that the processing of personal data relating to him or her infringes this Regulation.

That's just for GDPR violations of course.

Also a TOS can never override local laws. When you serve European users you're subject to European laws and local country laws. Nothing will stop European users to complain to local authorities to lodge a complaint or to start a court case within Europe.

For example: https://www.reuters.com/article/us-eu-court-facebook-privacy/eu-court-rejects-facebook-class-action-suit-by-privacy-activist-idUSKBN1FD33U

Schrems said the ruling was a “huge blow” for Facebook as his individual lawsuit against the company could go ahead in a Vienna court and Facebook would have to explain whether “its business model is in line with stringent European privacy laws.”

emphasis mine

https://www.tomshardware.com/news/facebook-loses-belgium-privacy-lawsuit,36540.html

Facebook also tried to argue that its Terms of Service say that any Facebook user can only sue it in the United States. The courts disagreed and called Facebook’s policy “abusive.”

emphasis mine

So, those TOS terms about the arbitration will never fly for European users. So you should either add a clause that it will only apply for Non EU users, or drop it.

Dutch law even states(found thanks to the comment of Adriaan)

http://wetten.overheid.nl/BWBR0005289/2015-06-19#Boek6_Titeldeel5_Afdeling3_Artikel236

Bij een overeenkomst tussen een gebruiker en een wederpartij, natuurlijk persoon, die niet handelt in de uitoefening van een beroep of bedrijf, wordt als onredelijk bezwarend aangemerkt een in de algemene voorwaarden voorkomend beding
Translation and emphasis mine
In the event of an agreement between a user and a counterparty, natural person, who does not act in the exercise of a profession or business, an condition shall be deemed unjustly onerous when the the general terms and conditions includes one of the following stipulations.

Section N:

N) dat voorziet in de beslechting van een geschil door een ander dan de rechter die volgens de wet bevoegd zou zijn, tenzij het de wederpartij een termijn gunt van tenminste een maand nadat de gebruiker zich schriftelijk jegens haar op het beding heeft beroepen, om voor beslechting van het geschil door de volgens de wet bevoegde rechter te kiezen;
translation mine
N) this provides for the settlement of a dispute by a party other than the court that would be competent according to the law, unless it grants the other party a period of at least one month after the user has invoked the clause in writing to the clause, in order to settle the matter. to decide the dispute by the judge competent according to the law;

Section N sounds awfully lot like the arbitration clause, even up to the month opt out mentioned.

EDIT Additional comment from Adriaan that adds some details.

Note that Dutch law isn't explicitly against mandatory arbitration; you need the month opt-out after the start of the dispute and you have the right to an independent judge/arbiter. It can be picked by the sector as a whole, but not by SE only (source) So the arbitration clause as currently written isn't going to hold up, but is doesn't mean any form of an arbitration clause is illegal under Dutch law.

EDIT

From the article posted by Nemo in the comments

Link: https://www.duo.uio.no/bitstream/handle/10852/22949/thesis.pdf?sequence=2

It's a very interesting read that shows how consumer laws evolved within Europe. I highly suggest to read it. Very informative.
I'll do my best to give a summary of the most important bits highlighted in the article.

I really like the motivation given for providing consumer law. To protect the weaker party. To prevent the twisting of arms sort to say.

Page 13

The two aforementioned traditional principles of private international law (the principle of the proper law and the principle of the freedom of choice) are now complimented by the principle of “protection of the weaker party”33. The principle is based on the presumption that the parties to a consumer contract are not contractually and economically equal. That is why legislator considers it necessary to protect the weaker party by the rules of law (in particular, private international law). The rules which are more favorable to the weaker party than the general rules (for business to business relations) should apply.

Up unto about page 23 it talks about the old Rome convention, interesting but not relevant.

Then around page 23 it starts about the the Brussels convention giving even more protection to consumers than on the older laws mentioned before. Giving the consumer the right to choose in which country to go to court, after the dispute has risen. Some conditions apply, but a safe bet is the home state.

Page 23

The Brussels Regulation Article 17 deals with the choice of jurisdiction in consumer contracts. Thus, the parties can choose the jurisdiction other than indicated by the Article 16 only if it was agreed by the parties after the dispute has arisen, or if it allows the consumer to bring proceedings in courts other than those indicated in the Article 16 (i.e. gives the consumer more choices), or if the parties were domiciled or habitually resident in the same Member State at the time when the contract was concluded which confers jurisdiction to the courts of this Member State. Thus, the principle of the freedom of choice is limited in the Brussels Regulation. Particularly, the Brussels Regulation does not permit to deprive a consumer of the protection by choosing the jurisdiction outside the country of his domicile. In any case if the consumer contract satisfies the requirements of the Article 15 (1) (c) the consumer is entitled to refer to the court of his domicile.

And they made rules even stricter for to whom it applies. Basically if you target European consumers, you're in the club and have to play by the rules.

Page 24

Thus the consumer contract falls under the judicial protection of the Regulation if it “has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer's domicile or, by any means, directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities”

So basically anyone using Stack Overflow, from Europe, falls under the European consumer protections. This gets re-confirmed later on.

Page 37 about the improved Rome convention removes some ambuigities

Thus, a consumer contract: 1) is governed by the substantive law of consumer‟s habitual residence if choice of law hasn‟t been made by the parties; or 2) if the parties have chosen another law to regulate their contractual relations, this law applies, but the choice cannot deprive the consumer of the protection afforded to him by mandatory rules of the country where he has his habitual residence. Basically the double rule left completely unchanged from the Rome Convention

So Stack Overflow can say they want USA, but they can't force it to circumvent EU memberstate protections

Page 39 gives us this nice bit

Article 6 (1) (b) alternative requirement: The contract is concluded between the consumer and the professional who, by any means, directs professional or commercial activities to111 the country of consumer‟s residence or to several countries including this country and the contract falls within the scope of such activities.

Stack Overflow surely targets European users, directs activities to European markets. I would say this makes it binding to fall under the EU protections.

This confirmed on page 43

Thus the Proposal for the Brussels Regulation set the following cumulative criteria: 1) The site has to be interactive (consumers must at least have a possibility to enter into contract via this website); and 2) The site should be accessible in the state of consumer‟s domicile.

Stack Overflow would fall in the interactive category, making it subject to the laws.

An interesting article that with the bits quoted here, but also in full read, confirming that the arbitration clause is moot for European users.

EDIT, found some more stuff

I found this nice tidbit on the eurlex

COUNCIL DIRECTIVE 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts

Got to love that title.

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31993L0013:EN:HTML

Article 3

1. A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.

2. A term shall always be regarded as not individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term, particularly in the context of a pre-formulated standard contract.
   The fact that certain aspects of a term or one specific term have been individually negotiated shall not exclude the application of this Article to the rest of a contract if an overall assessment of the contract indicates that it is nevertheless a pre-formulated standard contract.
   Where any seller or supplier claims that a standard term has been individually negotiated, the burden of proof in this respect shall be incumbent on him.

3. The Annex shall contain an indicative and non-exhaustive list of the terms which may be regarded as unfair.

ANNEX TERMS REFERRED TO IN ARTICLE 3 (3)

(q)
excluding or hindering the consumer's right to take legal action or exercise any other legal remedy, particularly by requiring the consumer to take disputes exclusively to arbitration not covered by legal provisions, unduly restricting the evidence available to him or imposing on him a burden of proof which, according to the applicable law, should lie with another party to the contract.

Then there is this interesting answer: How does SE's arbitration clause hold up under the GDPR?

But let your lawyers decide about this fun issue that spans multiple jurisdictions worldwide. Maybe let them read that article.

I don't know if asking a question here is ok but:

we would have looked to see if we could implement the clause a bit differently. We included a means to opt-out

Is there any reason a user would not want to opt-out? What does the user gain by giving up their right to participate in a class action?

And if they don't gain anything, wouldn't the best thing be to switch it to an opt-in, or just ditch the provision altogether?

The idea that users are giving up a right unless they happen to read the complete ToS when they sign up (which no one ever does), understand the implications for a situation which will probably never happen, and then actively take a legalistic step to make that happen seems absurd.

Imho, adding a one-sided arbitration clause to the TOS is prima facie evidence that StackExchange management is now worse. It negates the goodwill I felt reading that you all were trying to be more 'inclusive'.

Perhaps the idea of being inclusive is not the same between us. To me, being inclusive and welcoming means, as a low baseline, that ordinary people do not have to fear lawyers at their backs.

As I understand it, SO 'owns' all the content I freely contribute. Due to that, they should never have a claim against me. Exactly how would I ever be the subject of a lawsuit? If I would be one, then why would I contribute content for which I don't keep access and ownership?

I think the lawyers have OVERREACHED [in their font face lol]. They wanted to add a TOS for the new service in which users contribute valuable private corporate data which needs to be protected. For that information, the companies that buy the service should sign agreements. I am still against arbitration, but at least [even small] companies are 'expected' to be deep pockets [which in itself is an evil supposition]. The supposition is then: if you are willing to pay $5/month/person then you are wealthy enough to pay $50k++ lawyering should you need it.

Please remove this arbitration clause asap. Thank you for listening to our remarks. Without this thread as forum and changes I would simply start looking more and more askance at SO, reduce usership, look elsewhere, and/or start my own.

As a followup to David's post, concerning the sunset date for arbitration claims, I'd like to know whether the restriction is symmetric. From the new Terms:

b. Mandatory Arbitration
...
You agree that regardless of any statute or law to the contrary, any claim or cause of action arising out of, related to or connected with the use of the public Network or these Public Network Terms must be filed within one (1) year after such claim of action arose or be forever banned.

I understand this to mean that we cannot file an arbitration claim against Stack Overflow for something that happened more than one year in the past.

But, is the reverse true? Do Stack Overflow (or its successors) also agree that they cannot file a claim against us for our (mis)use of the Network more than one year in the past? Or could Stack Overflow file a claim against us for something we did at any time in the past?

Can I get some clarification on this part of the new Mandatory Arbitration clause?

This is the end of the first paragraph (the one where the Lawyers are yelling). Section 10. General Provisions subsection b. Mandatory Arbitration.

You agree that regardless of any statute or law to the contrary, any claim or cause of action arising out of, related to or connected with the use of the public Network or these Public Network Terms must be filed within one (1) year after such claim of action arose or be forever banned.

What is it that happens or be forever banned? Whenever I read "be forever banned." I get very curious, and very much want to know what not to do to get perma banned.

The way I see it now it says "any claim must be filed within one year of the thing happening, else you get banned."

Is that right? If so, why are we threatening legal tardiness with a ban for life? Is that a network wide ban?

(I know, a lot of questions for an answer)

UPDATE: If this arbitration effort goes forward, on 1 June 2018, one day before the clause goes into effect, I will do the following:

1. I will view StackExchange as a potential enemy of the movement toward more free societies.
2. I will create an open source markdown repository on both GitHub and GitLab and on a site that I own containing all of my questions and answers for which I own the copyright to on Stack Exchange sites.
3. I will delete all of my questions and answers on all Stack Exchange sites.
4. I will open up the site for others to do the same. If I can find an API to automate this migration, i will do so, too.

We are hacktivists. We have legal abilities to effect the hands of tyrants. Don't forget that.

Let's say you are an active member on a site like StackOverflow, or worse, Facebook. I have a 10,000+ rep, so it's safe to say I'm in that category.

Now say that you have agreed to an Arbitration-only clause, or even the exact clause StackExchange wants us all to agree to.

NOW say that the site admins / developers do something REALLY STUPID (like store all your passwords in clear text in a semi-publicly-accessible log file (::cough:: Twitter). Or what if a dev does something down right evil, resulting in harassment, or even death, or something truly terrible, based on inside info (say, IP addresses) or gaming the system for employers, all sorts of stuff.

What if StackExchange decides to get in bed with a government agency, not even your own government agency, that wants to track and spy upon and collate the information EVERYONE who knows certain hacking techniques? Know about RIPS security software? They could do so for money, you know. Lots and lots of value in that information.

Well, as of right now, all of the affected could sue the company for, say, negligence in handling their stuff. A class action lawsuit would cost nothing to a mere handful of dollars, thus causing large sites, like Stack Exchange, to be very careful in their business dealings.

After you sign the arbitration clause? You're going to be going to a figurative kangaroo court, hand-picked (and stated in writing) by the Wrong Doer, that 80%+ of the time sides against the little man (you and I) because the Oppressor pays their bills.

Now, imagine if all these big sites had thought to add these clauses in their Agreements 10 years ago? Hell, we'd already be living in a dystopia! For sure!

If the max fine they could get slapped with is like $1,000, suddenly this "spying for the NSA" crap looks much more profitable. Maybe (certainly?) not for the current corporate owners, but it's one CEO-change away from becoming a reality, and do NOT THINK that this does not happen in other avenues.

StackExchange profiles EVERY DEVELOPER on the planet! Ethical hacktivists, biohackers, cryptocurrency developers (me), peer-2-peer innovators (me), secure communications developers (me), we are all systemic threats to The System and virtually every non-free government on Earth.

We cannot let the platform which we have all, monopolistically plied our questions and answers on, adopt this insane arbitration clause. At least not for non-Europeans.

Boycott arbitration clauses for EVERY site where you leave personal information or a way to catalogue and reference a high percentage of people in disruptive crafts. The last thing we want is for the arbitration virus to spread across all websites and all of our lesser intelligent, lesser aware, less awoke friends and family falling victim to them, and taking down society with them.