Arbitral Power and the Limits of Contract: The New Trilogy

American Review of International Arbitration, Forthcoming

Energy Center Research Paper No. 11-11

102 Pages Posted: 8 Oct 2011  

Alan Scott Rau

University of Texas at Austin - School of Law; University of Texas at Austin - Kay Bailey Hutchison Center for Energy, Law & Business

Date Written: October 7, 2011

Abstract

The American law of arbitration has for some reason been replete with what we have become accustomed to call “trilogies” – and the last two terms of the U.S. Supreme Court have curiously continued that pattern. Once again the Court has handed us three leading cases on closely-related themes – and these decisions have turned out in fact to be in many ways the most interesting of the lot. (I am referring of course to Stolt-Nielsen, Rent-A-Center, and Concepcion.)

All three amount to extended riffs on the Question of Questions – the scope of arbitral power: And so the Court has continued to dip its finger into this rich mixture – compounded of notions of judicial review, “arbitrability,” “separability,” compétence/compétence, and the preemption of state law – all of our hard-earned lore and learning is there. Apparently it is now well beyond the power of arbitrators to hold that “classwide proceedings are permitted,” at least without some pretty special authorization (Stolt-Nielsen) – while it is well beyond the power of courts to hold that they must be – certainly not when the parties have agreed to an arbitral determination (Rent-A-Center), and even when they haven’t (Concepcion).

It seems reasonably clear that these cases will continue to generate endless discussion. Undoubtedly for the moment the greatest salience will be with respect to arbitration clauses in contracts of adhesion entered into by consumers and employees – although this recent jurisprudence has the potential of sweeping far more broadly. Things now seem curiously muddled: If our law of arbitration no longer seems to have any clear unifying theme, this suggests that private adjudication – rather than presenting us as it once did us with a coherent and self-contained body of doctrine – has become a hostage to a game played out on a larger stage, a pawn of wider, systemic “political” concerns. Throughout the “trilogy” we have seen much familiar learning yoked to the service of a market-driven political agenda, in the process inevitably becoming warped and almost unrecognizable. And so – yet another untoward result – these cases will require the reevaluation of what seemed, for a while, to constitute comfortably settled certainties. Here is at least one step in that direction.

Keywords: Arbitration, Contracts, Adhesion, Class Actions, Unconscionability, Consumer

JEL Classification: K12, K41

Suggested Citation

Rau, Alan Scott, Arbitral Power and the Limits of Contract: The New Trilogy (October 7, 2011). American Review of International Arbitration, Forthcoming ; Energy Center Research Paper No. 11-11. Available at SSRN: https://ssrn.com/abstract=1938565

Alan Scott Rau (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

University of Texas at Austin - Kay Bailey Hutchison Center for Energy, Law & Business ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

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