Hegel and the Justification for Arbitration in a Modern State

Abstract

This paper explores the normative justification for arbitration, particularly the type of binding mandatory arbitration that is the subject of contemporary controversy in the United States. At the heart of the controversy is the question of on what grounds can public legal institutions and public law sanction the mandatory use of private institutions that are not bound to follow public law, at least without undermining the justification for public legal institutions in the first instance. One common way to solve this riddle is to argue that because public law is grounded on the social contract, it must honor the contracts to arbitrate made as an alternative to public law.

Hegel was both a famous proponent of the modern state, including public law, and an opponent of social contract theories. Nevertheless, in his central work on legal philosophy, the Philosophy of Right, he argues for a role for binding arbitration in a passage that I have never seen discussed at any length. This paper seeks to understand Hegel's argument through looking more deeply at both its historical and philosophical context. In the end, it will be argued that Hegel's (very plausible) position is that arbitration is justified as a deviation from public law only to the extent that it is a corrective for those internal trends in law that undermine it as public and accessible. To Hegel's mind, arbitration was to be a state-sponsored alternative to public law to help weaker private parties against more powerful commercial interests better able to navigate and manipulate complex legal process.

Keywords: arbitration, Hegel, social contract