Solar Arbitration vs Lawsuit: Which Path Is Right for You?

If you're weighing solar arbitration vs lawsuit options against your solar company, the first thing you'll need to understand is whether your contract contains a mandatory arbitration clause — and what that means for your dispute. Based on our research, the vast majority of residential solar contracts include binding solar contract arbitration clauses, along with class action waivers. Should you sue your solar company or arbitrate? This guide explains what each path involves, compares costs and timelines, and helps you decide which approach is most likely to get results.

What Is Solar Arbitration and How Does It Work?

Arbitration is a form of alternative dispute resolution (ADR) where, instead of going to court, the parties present their case to a neutral third party called an arbitrator. The arbitrator reviews evidence, hears arguments, and issues a decision — called an "award" — that is typically binding on both parties.

In the solar industry, arbitration is most commonly administered by one of two organizations:

• American Arbitration Association (AAA): The most common arbitration provider specified in solar contracts. Has specific consumer arbitration rules designed to be more accessible to individuals.
• JAMS (Judicial Arbitration and Mediation Services): Another major arbitration provider with consumer-specific procedures.

The key distinction between arbitration and court litigation is that arbitration is private, less formal, and typically faster — but it also comes with limited discovery rights, limited appeal options, and no jury. For a deeper look at the consumer arbitration process, the CFPB's guide to arbitration is a useful starting point.

Solar Arbitration Clause: What It Means for Your Contract

Most solar contracts bury the arbitration clause in the fine print. Understanding your solar arbitration clause and what it means is essential before deciding your next move. Here's what a typical clause includes and what each provision means:

Should I Sue My Solar Company or Arbitrate? Side-by-Side Comparison

Pros and Cons of Solar Arbitration vs Lawsuit

Arbitration: Potential Advantages

• Speed: Arbitration typically resolves in 6-12 months, compared to 1-3+ years for litigation.
• Lower upfront costs: Under consumer arbitration rules, the business usually pays most arbitration fees. Your filing fee is typically around $200.
• Less formal process: Arbitration hearings are less intimidating than court proceedings. Rules of evidence are relaxed, and the process is generally more accessible to non-lawyers.
• Privacy: Arbitration proceedings and outcomes are confidential, which some consumers prefer.
• Convenience: Hearings can often be conducted by phone or video, and scheduling is more flexible than court.

Arbitration: Potential Disadvantages

• Limited discovery: You may have less ability to obtain documents and information from the solar company, which can be crucial for proving your case.
• No jury: Juries are generally more sympathetic to consumer claims than arbitrators, who tend to be more conservative in their awards.
• Very limited appeal: Arbitration awards can only be overturned in very narrow circumstances (fraud, corruption, or the arbitrator exceeding their authority). Even if the arbitrator gets the law wrong, you generally cannot appeal.
• No class action: You cannot join with other consumers, even if thousands of people have the same complaint.
• Repeat player advantage: Solar companies that regularly appear in arbitration may benefit from familiarity with the process and specific arbitrators.

Lawsuit: When It May Be Better

• Your case involves complex facts requiring extensive discovery
• Your damages are substantial and justify a jury trial
• You want to set a legal precedent that helps other consumers
• The arbitration clause in your contract may be unenforceable
• You want to pursue a class action on behalf of similarly affected homeowners

Not sure arbitration or a lawsuit is the right move? In some cases, there are other paths to exit. See our comprehensive guide on how to get out of a solar panel contract for all available options.

Solar Arbitration vs Lawsuit Cost Comparison

Understanding the financial implications of each path is critical for making an informed decision. Whether your solar contract arbitration is binding or you have the option to file in court, costs will be a major factor:

How to Challenge a Solar Arbitration Clause

While arbitration clauses are generally enforceable under federal law, there are circumstances where you may be able to challenge your solar arbitration clause. If your solar contract is legally binding, the arbitration provision within it may still be vulnerable:

Unconscionability

If the arbitration clause is so one-sided that it essentially prevents you from vindicating your rights, a court may find it unconscionable and refuse to enforce it. Factors courts consider include:

• Whether the clause was buried in fine print with no meaningful opportunity to negotiate
• Whether the cost of arbitration would effectively bar you from pursuing your claims
• Whether the clause limits remedies available to you beyond what the law allows
• Whether the clause requires arbitration in a distant location

Waiver by Conduct

If the solar company engages in litigation conduct inconsistent with its arbitration rights — such as filing a lawsuit against you in court, engaging in extensive court proceedings before raising arbitration, or participating in court-ordered mediation — it may have waived its right to compel arbitration.

State Law Limitations

Some states have enacted laws limiting the enforceability of arbitration clauses in certain consumer contracts. While the Federal Arbitration Act (FAA) preempts many state laws in this area, some state-law challenges have succeeded.

Failure to Pay Arbitration Fees

If the solar company fails to pay its share of arbitration fees as required by the arbitration provider's rules, you may be able to return to court. Under AAA rules, a company's failure to pay can result in administrative suspension of the arbitration.

Solar Small Claims Court Alternative to Arbitration

Small claims court is often an overlooked but effective solar small claims court alternative, particularly for lower-value disputes. If you've been wondering whether there's a way around binding arbitration, this may be it. Key advantages include:

• Arbitration clause may not apply: Many arbitration clauses include a small claims court exception, allowing either party to file claims within the court's jurisdictional limits.
• No attorney needed: Small claims courts are designed for self-represented individuals. Procedures are simplified and judges are accustomed to working with non-lawyers.
• Fast resolution: Cases typically reach hearing within 30-90 days of filing.
• Low cost: Filing fees are typically $30-$100.
• Company must appear: The solar company must send a representative to the hearing, which creates leverage for settlement.

Small claims court limits vary by state — typically $5,000 to $25,000. If your damages fall within these limits, small claims court can be an excellent option. Even if your total damages exceed the limit, you may choose to waive the excess and pursue a smaller claim in small claims court rather than navigating arbitration or litigation.

Solar Class Actions and Binding Arbitration Waivers

The class action waiver in most solar arbitration clauses is one of the most consequential provisions for consumers. Here's what you need to know:

The U.S. Supreme Court has repeatedly upheld the enforceability of class action waivers in arbitration agreements, most notably in AT&T Mobility v. Concepcion (2011) and Epic Systems v. Lewis (2018). This means that solar companies can generally prevent you from participating in class actions through their arbitration clauses.

However, this doesn't leave you without options:

• Individual arbitration can still be effective: You can pursue your individual claims and potentially recover significant damages.
• Mass arbitration: When hundreds or thousands of consumers file individual arbitrations simultaneously, the sheer volume and cost (which the company must pay under consumer rules) can create tremendous pressure for a global settlement. This "mass arbitration" strategy has been increasingly successful.
• State AG actions: Even if you can't bring a class action, your state attorney general can bring enforcement actions on behalf of all consumers. You can also file a formal complaint against your solar company with state regulators. Learn about solar class action lawsuits →

Finding the Right Attorney for Solar Arbitration or Lawsuit

Whether you're heading into arbitration or considering a lawsuit, finding the right attorney is critical. Here's what to look for:

• Consumer protection experience: Look for attorneys who specialize in consumer protection law, not general practice attorneys.
• Solar industry knowledge: Attorneys familiar with solar contracts, lease structures, and industry practices will be more effective.
• Arbitration experience: If you're heading to arbitration, ensure your attorney has experience with the specific arbitration process (AAA, JAMS, etc.).
• Fee structure: Many consumer protection attorneys work on contingency, meaning they only get paid if you win. Ask about this during your initial consultation.
• Track record: Ask about outcomes in similar solar cases. A good attorney should be able to discuss their experience without revealing confidential details.

Find a solar panel lawyer →

Frequently Asked Questions