I mean, it's legal because no one has made a law against it. "Freedom of contract" isn't absolute - you can't sign yourself up as a slave. Consumer arbitration could be banned too.

I'm talking about consumer arbitration, which is as you say, inherently unbalanced. Yes, I'm sure there are situations where it's a good tool and I'm not saying ban arbitration completely, but right now we can see the damage from it being misapplied.