More on the Question of When to Arbitrate and When to Instead Litigate

Pretty much since I started writing this blog I have talked about how, in my experience, commercial arbitration is not a panacea and often is not a better forum than litigation for resolving disputes. My main point has always been that it depends on the particular dispute and on the details of a party’s position, including the strengths and weaknesses of that party’s case. Since beginning my run of comments on that theme, there has been no shortage of pieces in major media outlets basically saying the same thing, some of which I have linked to on occasion here on this blog.

I particularly like this latest one on the subject, however, by Jo Ann Shotwell Kaplan, the general counsel of the New England Legal Foundation, and thought I would pass it along. The article reports on a seminar the foundation hosted on the subject of commercial arbitration as a forum for deciding business disputes. One of the things that makes it worthwhile reading on a subject that has otherwise been well plowed elsewhere is the strength of the panel discussing the issue, and the article’s ability to capture some of the more subtle considerations in determining whether arbitration, or instead the courtroom, is the way to proceed. As an example, I particularly appreciated the point raised by one of the panelists, counsel to a major consumer products company, that arbitration is best used in the context of recurring disputes between the same players because in those instances the parties are motivated to make the best use of the system, but that arbitration is simply a failure when applied to one and done disputes that are subject to arbitration only because of a pre-dispute mandatory arbitration clause.

The second thing I liked about the article was a point it made which I simply have not seen made anywhere else, which in this world of media saturation is a rare occurrence. The article discusses the views of one arbitration expert that commercial arbitration, whatever its merits may be when resolving other types of disputes, is actually preferable to litigation with regard to international disputes, for two reasons. The first is that using arbitration puts the parties on the same playing field, removing from the equation the differences between the different legal systems applicable in the different countries where the businesses involved in the dispute are domiciled. The second, and almost stunning reason, is that commercial arbitration rulings out of this country are often more respected in other countries’ court systems than are court verdicts. The panelist, a Boston University Law School professor: 

explained that a U.S. arbitration award has more international currency than a decision of the U.S. Supreme Court. Apparently other countries don’t think too much of our system of jury trials in civil cases and runaway punitive damage awards. They have agreed to enforce our arbitration awards, but not our court judgments.