46 Pages Posted: 16 Jul 2012 Last revised: 5 May 2015
Date Written: 2014
We study the role of arbitrator background in securities arbitration. We find that arbitrator background is correlated with arbitration outcomes. Specifically, industry experience, prior experience as a regulator, and status as a professional arbitrator are correlated with statistically significant differences in arbitration awards. We find that the impact of these characteristics is affected by whether the arbitrator in question serves as the panel chair and by whether the parties to the arbitration are represented by counsel.
Our findings offer some preliminary insights into the debate over arbitrator bias. On the one hand, they suggest that the party selection process is relatively effective in screening for potential bias. FINRA has imposed increasingly more rigorous qualification requirements, specifically with respect to the independence of public arbitrators, but our study suggests that these requirements are unlikely to affect outcomes in most cases. On the other hand, party selection appears to be most effective when the parties are represented by counsel. Our findings highlight the importance of legal representation in the arbitration process.
Suggested Citation: Suggested Citation
Choi, Stephen J. and Fisch, Jill E. and Pritchard, Adam C., The Influence of Arbitrator Background and Representation on Arbitration Outcomes (2014). Virginia Law & Business Review, Vol. 9, P. 43, 2014; U of Michigan Public Law Research Paper No. 285; NYU Law and Economics Research Paper No. 12-17; U of Penn, Inst for Law & Econ Research Paper No. 12-35. Available at SSRN: https://ssrn.com/abstract=2109712 or http://dx.doi.org/10.2139/ssrn.2109712
By Jill Fisch
By Jill Fisch