From Courts to Arbitration: Arbitration's Confidentiality Advantage

Lu, Yijia

doi:10.2139/ssrn.3442171

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From Courts to Arbitration: Arbitration's Confidentiality Advantage

NYU Law and Economics Research Paper No. 20-09

34 Pages Posted: 24 Aug 2019 Last revised: 14 Apr 2020

See all articles by Yijia Lu

Yijia Lu

George Mason University - Antonin Scalia Law School

Date Written: August 11, 2019

Abstract

This paper points out an intrinsic inefficiency in contemporary courts: courts adjudicate publicly, leading to deadweight loss in the form of reputational damages. I build a model to show that arbitration can circumvent this inefficiency by affording disputants a renegotiation opportunity following private adjudication. I then apply this model to account for the historical evolution of arbitral institutions in the 20th century under the leadership of the International Chamber of Commerce, and underscore critical elements in the building of strong arbitral institutions.

Keywords: arbitration, reputation, dispute resolution, international

JEL Classification: K40, N40

Suggested Citation: Suggested Citation

Lu, Yijia, From Courts to Arbitration: Arbitration's Confidentiality Advantage (August 11, 2019). NYU Law and Economics Research Paper No. 20-09, Available at SSRN: https://ssrn.com/abstract=3442171 or http://dx.doi.org/10.2139/ssrn.3442171