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Abstract:
Sovereign bond contracts are thought to consist mostly of boilerplate. That is, except for a handful of custom terms, the contracts are assumed to adopt standard terms that are functionally if not literally identical to those used in other bond contracts. This characterization has important theoretical implications, for standardized terms may be "sticky." The implication is that market participants may select widely-used terms over terms that would be optimal on their own merits.

This article explores the phenomenon of standardization in the context of a particular contracting choice: whether to include an arbitration clause in a sovereign bond contract. Most observers take for granted that sovereign bonds adopt boilerplate dispute resolution provisions calling for litigation in foreign courts, typically in New York or in England, even though some parties (by hypothesis) would prefer arbitration. The usual explanation for this discrepancy invokes the inherent "stickiness" of standard terms. This article contests this explanation, demonstrating as an empirical matter that sovereign bond contracts in fact adopt varied dispute resolution terms and arguing that a general preference for litigation, rather than default rule stickiness, best explains the relatively infrequent use of arbitration. In the process, the article raises broader implications for sovereign debt research and for research into contract innovation and change.

Abstract:
Mandatory arbitration has engendered a significant amount of debate, much of which focuses on the proper response the law should make to "one-sided" clauses - i.e., those that restrict the remedies and procedures available to individuals in arbitration. But how do we identify one-sided clauses? The answer seems simple: collect and evaluate the contracts. Consider, for example, an employment contract that provides: "We agree to resolve any and all disputes by binding arbitration, to be conducted in Philadelphia, PA under the then-applicable rules of American Arbitration Association or JAMS. The arbitrator may not award punitive or exemplary damages." Because this clause appears to prohibit awards of punitive damages and to require significant travel for individuals who live far from Philadelphia, it might fairly be termed "one-sided."

This Essay suggests, however, that arbitration clauses may paint an incomplete or even misleading picture of actual arbitration procedures and remedies. Indeed, seemingly one-sided clauses, like the one in my example employment contract, sometimes may yield a relatively even-handed disputing process. Conversely, seemingly even-handed clauses may obscure a one-sided process. This Essay explores these possibilities and offers two related insights. First, arbitration clauses are incomplete and possibly inaccurate signals of arbitration "fairness." Second, understanding arbitration as a legal, social, and contracting phenomenon may require sustained inquiry into the relationship between arbitration contracts and the rules and practices of arbitrators and arbitration providers.

Abstract:
A growing body of empirical research explores the use of arbitration to resolve employment disputes, typically by comparing arbitration to litigation using relatively traditional outcome measures: who wins, how much, and how quickly. On the whole, this research suggests that employees fare reasonably well in arbitration. Yet there remain sizeable gaps in our knowledge. This Essay explores these gaps with two goals in mind.

The first and narrower goal is to explain why it remains exceedingly difficult to assess the relative fairness of arbitration and litigation. The outcome research does not account for a variety of "filtering" mechanisms that influence the relative merits of the cases adjudicated in each system. This Essay explores these filters, focusing on one in particular: most employee grievances are resolved within the workplace through relatively informal procedures. Workplace structures thus filter out most employee grievances before they reach arbitration. This fact has significant implications for efforts to interpret the arbitration outcome research. It also highlights the significance of the workplace as a locus of dispute resolution activity. Indeed, a growing body of research focuses directly on workplace compliance and grievance procedures.

Recognizing the significance of workplace dispute resolution leads to this Essay's broader goal. That goal is to expose, and hopefully bridge, an artificial conceptual divide that separates the arbitration research from research into workplace dispute resolution. Many researchers view internal compliance and grievance procedures as a means of harnessing the employer's own regulatory capacity. This conception drives a research agenda that explores the role of workplace structures in generating private norms and in implementing (or subverting) public norms like anti-discrimination. By contrast, the arbitration outcome research conceives of arbitration narrowly as a court surrogate, one that should ideally yield equivalent outcomes at lower cost. Although legitimate to a degree, this conception artificially separates arbitration from other employer-structured disputing procedures and yields an empirical agenda that leaves fundamental questions unanswered. This Essay closes by discussing two of these questions: First, do arbitrators play a meaningful regulatory role, either by shaping other arbitrators' practices or by shaping the terms of arbitration contracts? Second, under what circumstances do arbitrators effectively generate and enforce norms?

arbitration, contracts, dispute resolution, employment

Abstract:
Skeptics and champions of the use of arbitration for consumer and employment disputes do not agree about much, but each group views arbitration as an individuated dispute resolution process. According to many skeptics, arbitration prevents consumer and employee claimants from aggregating their claims (by formal or informal means) and thus forces these claimants into individualized proceedings where neither they nor their lawyers can counter the advantages presumably enjoyed by more powerful, repeat-player businesses. I call this the individuation critique. In reply, arbitration proponents defend its fairness as a forum and advance efficiency arguments in its favor, but they generally do not suggest that arbitration could or should facilitate the aggregation of consumer and employee claims.

This article calls into question skeptics' and proponents' shared conception of arbitration. Relying in part on evidence from the recent, and rather unusual, phenomenon of class arbitration, I argue that the individuation critique may overestimate the extent to which arbitration agreements and arbitration procedures currently individuate the disputing process. Moreover, I argue that arbitration may have significant potential to facilitate formal and informal aggregation, especially for consumer claimants. Class arbitration illustrates this potential most clearly, for it may enable forms of collective adjudication that are unavailable to litigants in court. Even in individual disputes, however, arbitration might facilitate aggregation in informal but important ways. For example, although arbitrators generally do not create or follow precedent, evidence from pending class arbitrations suggests that they may be strongly influenced by other arbitrators' decisions in similar cases. Under the right conditions, arbitrators may produce something akin to informal precedent, and this possibility may encourage plaintiffs' lawyers to invest in creating rules from which multiple claimants can benefit. I conclude by suggesting some reforms to arbitration provider policies that might encourage specialized, repeat-player lawyers to accept, even seek out, arbitration cases and to make meaningful investments in these disputes.