2,300 Chinese sellers apply for compulsory arbitration against Amazon!

The wave of account bans on Amazon in 2021 left a deep impression on people across the border . In order to protect their own rights and interests, Chinese sellers have been making efforts.

In November 2023, Justitia DAO, LLC ( hereinafter referred to as Justitia ) filed an arbitration application against Amazon with the American Arbitration Association ( AAA ) on behalf of 2,301 Chinese sellers, demanding that Amazon compensate it for its closure of seller accounts and freezing of seller payments, involving an amount of US$23 million.

In mid-month, Justitia filed another formal complaint with the U.S. District Court for the Western District of Washington, requesting a judge to issue an order forcing the AAA to appoint an arbitrator to rule on Justitia's claim against Amazon.

It is reported that AAA was founded in 1926 and is a private non -profit permanent arbitration institution headquartered in New York ; Justitia is a decentralized autonomous organization in Wyoming , USA , which aims to help and support small retailers, individuals and investors to seek fairness and justice in the complex and unfair international business environment .

Last year’s 2,301 sellers were the first batch of Chinese e-commerce sellers represented by Justitia . According to the editor, if you enter the Justitia official website now, you can still see the seller information collection of Amazon’s frozen funds project.

( Screenshot of the Amazon project on Justitia’s official website)

It is reported that the arbitration application submitted by Justitia to AAA mentioned that according to the contract between Amazon and platform sellers, third-party sellers must agree that Amazon will withhold the seller's funds indefinitely. If Amazon "determines" that the seller will bring "risks" to the platform, the funds in the seller's account will be compensated to Amazon. As a result, many sellers' funds were confiscated by the platform; " the confiscation of payment clause is legally unreasonable " and the confiscation of sellers' profits without proper procedures or proof of damages constitutes a breach of contract and the obligation of good faith and fair dealing, and is an act of misappropriation.

In fact, Justitia filed an arbitration application with AAA based on the Amazon Business Solutions Agreement (BSA), which stipulates that any dispute between sellers and Amazon or any claim related to the BSA must be subject to binding arbitration by the American Arbitration Association (AAA) in accordance with its Commercial Rules.

As for the reason for suing AAA, it is because AAA rejected the arbitration application filed by Justitia. It is reported that Amazon sent a letter to AAA, asking AAA to reject Justitia's arbitration application on the grounds that "Justitia's claim structure does not comply with BSA regulations." It is reported that the Amazon Business Solutions Agreement (BSA) also stipulates that any dispute resolution procedure must be conducted on an individual basis, rather than in a collective, joint or representative action.

In the complaint, Justitia's legal team stated that Amazon used its monopoly position to block (sellers) from going to court, interfered with the AAA's procedures, and rejected Justitia's arbitration application. Therefore, according to the (US) Federal Arbitration Act, Justitia filed a lawsuit, requesting the court to appoint an arbitrator to determine the arbitrability of Justitia's arbitration request and preside over the arbitration.

Brandi Balanda, chief legal counsel at Justitia, said , “The court’s acceptance of this case marks a critical moment in the ongoing struggle of small sellers to protect their rights against the large e-commerce platforms that dominate the online market.”

At present, the outcome of this lawsuit is still unknown, but the most important thing for sellers is to understand Amazon’s policy requirements and operate in compliance to avoid the risks of account suspension and frozen funds.

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