Microsoft is pushing Xbox Live users into settling all legal disputes through binding arbitration rather than a trial. The new wording states “You understand and acknowledge that by agreeing to binding arbitration, you are giving up the right to litigate (or participate in as a party or class member) all disputes in court before a judge or jury. Instead, you understand and agree that all disputes will be resolved before a neutral arbitrator, whose award (decision) will be binding and final, except for a limited right of appear under the Federal Arbitration Act. Any court with jurisdiction over the parties may enforce the arbitrator’s award.” Binding arbitration is somewhat similar to mediation, but rulings are typically final and cannot be appealed.
Sony rolled out a similar change to the Terms and Conditions for the PlayStation 3 during September 2011. Users were asked to perform a mandatory update to PlayStation 3 firmware and give up the right to join a class action lawsuit. Sony is still dealing with litigation around the service outage that occurred earlier this year due to hacking issues. In case of a potential Xbox Live outage or any other problem with the online gaming service, Microsoft is likely seeking a way to avoid any litigation before an issue occurs on Xbox Live.