Reexamining Arbitral Immunity in an Age of Mandatory and Professional Arbitration

Abstract

In the past ten to twenty years, the use of arbitration as a form of private dispute resolution has proliferated as a result of mandatory predispute and form arbitration contracts between corporate entities and their customers, patients, or employees. This increase has spawned a market for professional private arbitrators and an industry of private businesses that provide arbitration support and administrative services (provider institutions). Under the doctrine of arbitral immunity, both arbitrators and provider institutions are immune from civil liability. The result of this immunity, however, is that parties injured by arbitral misconduct have limited recourse and no effective remedy. This article examines the assumption that arbitrators and providers should be per se immune from civil liability.

Arbitral immunity developed out of the immunity doctrine established to insulate public judges and certain other public officials who act in a comparable adjudicatory function. Significant difference, however, exist between public judges operating in an open judicial process and the private world of arbitration. These differences necessitate a more exacting scope of immunity. This article proposes a standard of qualified immunity that appropriately balances the competing policy concerns of protecting arbitrators in their decisional roles, while also holding the arbitration industry accountable to parties and the public. A system for public oversight of arbitration to better ensure process fairness to participants, meaningful enforcement of arbitral codes of conduct, and accountability of the arbitration industry is also proposed.

Keywords: arbitration, dispute resolution, arbitral immunity

JEL Classification: K49