Y Combinator’s TOS has an arbitration clause. [3] If you’ve created an account on HN, you’ve agreed to arbitration.
[1] https://stackoverflow.com/legal/terms-of-service/public
In most countries consumer arbitration is either heavily regulated, or non binding. In EU pre-dispute binding consumer arbitration clauses are considered unfair terms.
American Exceptionalism in Consumer Arbitration https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2265556
As an example there are clauses written into ToS which don't allow refunds on digital purchases. These work fine in the US but are illegal in countries with stronger consumer protections like Australia. US companies do still have to obey local laws - at least when it comes to the sale of faulty goods.
I would suspect (not a lawyer) that the main issue will be jurisdiction.
As a consumer in the EU, jurisdiction in matters with commercial entities is the consumer’s place of residence. But HN/YC isn’t in the EU, and I don’t think there are any legal agreements b/w the EU and USA that are relevant here. Free trade agreements tend to include such issues, but TTIP’s well-known fate means this is left to the parties to specify in any contract.
Then, there’s a difference b/w HN and YC. HN’s relationship to users is that of a commercial entity to consumers. But YC investing in your startup isn’t. Consumer protections would not apply even if YC were in the EU.
To summarize: yes, the arbitration clause, at least of YC, would apply to the same extend as if you were a US citizen.
If you could pull that part off, I think you could take YC to court in Germany, and even achieve a favorable judgement. However, I don't see any way how you could enforce the outcome, except if YC has assets in Germany.
Arbitration can't completely remove access to the courts -- it can (and does) make it harder to get there. Case law for this sort of thing is always evolving, and so is statutory law. It's entirely possible for the courts to modify arbitration sufficiently to make the playing field more even.
Even more troubling is binding-arbitration and class-action waivers for employment. They suppress cases of systematic mistreatment and allow issues to be swept under the rug, even more so than they are already.
For instance, if you want to get insurance for a riding academy, they will want you to get all your riders to sign a contract that disclaims all liability, put up a big ugly sign about it, all that.
Thats is not true. I just tried creating an account, there isnt even even a mention of any terms of service.
> Welcome to the Y Combinator website (including all subdomains, the “Site”)
> This Site provides, among other things... forums for discussions about topics relevant to startups
> THESE TERMS OF USE CONTAIN AN ARBITRATION AGREEMENT, WHICH WILL, WITH LIMITED EXCEPTION, REQUIRE YOU TO SUBMIT CLAIMS YOU HAVE AGAINST US TO BINDING AND FINAL ARBITRATION.
It’s odd that there isn’t any mention of the TOS upon registration. Does this mean they could potentially be non-enforceable?
EDIT: Did some random googling about enforceability of terms of service. In a case discussed here[1] the ToS were deemed unenforceable based upon in part the lack of assent to the terms.
> [A]cceptance need not be express, but where it is not, there must be evidence that the offeree knew or should have known of the terms and understood that acceptance of the benefit would be construed by the offeror as an agreement to be bound. . .That is not the case here. The plaintiffs were never put on inquiry notice of the arbitration provision, and their continued credit-card payments, which were auto-debited from their credit cards, were too passive for any reasonable fact-finder to conclude that they manifested a subjective understanding of the existence of the arbitration and other emailed provisions and an intent to be bound by them in exchange for the continued benefits [membership] offered.
In the HN case I would argue that there is no evidence that anyone creating a HN account knows or can be expected to know that there are ToS related to that account creation that they are agreeing to, as there is no mention of them in the complete registration process.
[1] - https://www.forbes.com/sites/oliverherzfeld/2013/01/22/are-w...
Ignore the arbitration clauses and talk to your lawyer.
Binding arbitration clauses in ToS are there primarily to make people think that they can't sue.
[1] https://blog.rongarret.info/2011/12/cosmo-and-me-part-3-how-...
[2] https://contract-law.laws.com/contract-law/meeting-of-the-mi...
1. Binding Arbitration is enforceable.
2. Binding Arbitration clauses fall under contract law.
3. By virtue of point 2, Binding Arbitration clauses require a Meeting of the Minds in order to be valid and enforceable.
I think you're attacking a straw man.
They aren't dubious, they aren't ruled unconscionable. If you sign up for some service and agree to the terms of service that include arbitration, you're going to arbitration and nothing else. Yes, your click on "I agree to the TOS" is binding on you, no, no one cares that you were closing your eyes or crossing your fingers or whatever. Your use of the service shows your agreement.
No, that is not necessarily true. If I put in my ToS that by using my site you agree to (say) my installing malware on your machine that will allow me to go into your bank account and take as much money as I want, that will (almost certainly) not be enforceable.
>Yes, your click on "I agree to the TOS" is binding on you
There is no such button in this particular case.
>no, no one cares that you were closing your eyes or crossing your fingers or whatever.
This is a straw man. Nobody is claiming this.
>Your use of the service shows your agreement.
That very much depends.
Is it similar to criminal defense or PI where an attorney seeks out the case and will then take a large fee if they win?
The concept of class-action lawsuits isn’t as relevant here, and there is no such concept as “punitive damages”. The best you can hope for is a court order granting you whatever Igor is in dispute plus any actual damages.
Lawyers’ fees and court costs are also awarded to the winner by default, with a sliding scale for such fees based on the value in dispute. You can sometimes find a lawyer who will take your case if they are optimistic as to your chances, but of the cases I know, this mostly happens when the lawyer also has some ideological interest in it (say privacy or labor law).
There is insurance you can buy that will cover legal costs, but you will need to convince them of your chances in any litigation that you want to initiate (as opposed to being sued). There are also a number of non-profits that offer legal services for specific issues, typically in exchange for yearly fees: unions, tenants’ organisation, and even dog owners’ or RC airplane clubs.
So a mandatory arbitration clause can be written here, but you would fail to stop your customer from going to court if they disagree with the arbitration outcome.
Similar for things like excluding warranty, you cannot legally decrease consumer product warranty below 2 years in Europe. You would loose that case, because the courts have ruled that less then 2 years (or less than the reasonably expected economic life of the product if that's longer) is unfavorable to the consumer and thus null.