Committee Approves Economy-Chilling Proposal
The Connecticut legislature’s Banking Committee narrowly approved a proposal that will have a chilling effect on businesses and make them think twice about whether Connecticut is the right place to sell their products and services.
If adopted, HB 5561 would give consumers the ability to reform and change contracts that they have legally entered into with businesses in Connecticut.
That provision, contained in the original version of the bill, is harmful enough, but the Banking Committee amended and worsened the proposal before approving it on a narrow 10-8 vote.
The committee-approved bill would not only allow an individual to file a private action against a business, but he or she also could bring an action on behalf of the state.
And contradicting federal law and recent Supreme Court decisions, a provision in HB 5561 nullifies agreed-upon arbitration clauses in consumer contracts.
It does this by asserting that no contract shall waive or limit a private party’s right to bring suit.
Courts have long held that Congress intended to foreclose state legislative attempts to undercut the enforceability of arbitration agreements.
But a national expert in anti-trust matters testified that the provision is out of line with federal law.
"The Federal Arbitration Act makes arbitration agreements in contracts affecting interstate commerce 'valid, irrevocable, and enforceable,'" said attorney Robert Langer, partner in the Hartford office of the law firm Wiggin & Dana.
"Courts have long held that in passing the FAA, Congress intended to foreclose state legislative attempts to undercut the enforceability of arbitration agreements."
HB 5561 is such a legislative attempt that lawmakers should recognize as legally flawed and significantly harmful to Connecticut’s economy and business climate.
CBIA continues to oppose this bill and urges Connecticut lawmakers to reject it.
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