Judging Lite: How Arbitrators Use and Create Precedent

Abstract

Common wisdom has it that arbitrators neither follow nor make precedent, with potentially dire consequences. These include the failure to enforce individual rights and the possibility that, over time, widespread use of arbitration will result in the decay or destruction of the law itself. Although difficult to test directly, this common wisdom can be explored indirectly by analyzing arbitrators’ citation practices. This article conducts such an analysis using a unique dataset of published arbitration awards from four US arbitration regimes: securities, labor, employment, and class action arbitration. It explores how arbitrators use precedent and where that precedent comes from, and it attempts a tentative comparison between the citation practices of judges and arbitrators.

Outside of securities and (to some extent) labor arbitration, the arbitrators in the sample routinely wrote lengthy awards that were substantially devoted to legal analysis and that made extensive use of precedent. The vast majority of cited precedent, moreover, came from published judicial opinions. Arbitrators did cite to past arbitration awards, but primarily to fill gaps in the law created by government actors. On the whole, the evidence provides little support for the view that arbitrators and judges engage in qualitatively different kinds of decision-making or opinion-writing.

Keywords: arbitration, contracts, precedent