Arbitral Decision-Making: Legal Realism and Law & Economics

Journal of International Dispute Settlement, 2015, Vol 6

King's College London Law School Research Paper No. 2015-28

27 Pages Posted: 19 May 2015 Last revised: 18 Jun 2015

See all articles by Thomas Schultz

Thomas Schultz

King's College London; University of Geneva; Graduate Institute of International and Development Studies (IHEID) - Geneva Center for International Dispute Settlement (CIDS); Graduate Institute of International and Development Studies

Date Written: May 18, 2015

Abstract

As the social impact and role of international arbitration receives increasing attention, one central theme in this conundrum gains prominence: how do arbitrators decide cases? What influences arbitral decision-making? With the progressive opening of scholarship in the field to interdisciplinary approaches and studies going beyond doctrinal work, the question often takes the following form: do arbitrators apply the law, or do they make decisions based on something else – personal preferences, political biases, etc? When empirical studies fail to find significant statistical evidence of the role of extra-legal factors in their decision-making, the conclusion is drawn that arbitrators do indeed nothing else than apply the law. This article argues that the question so posed is an argumentative fallacy. Using the epistemology of legal realism and a simple methodology of law & economics, this article maintains that arbitrators, like every dispute resolver, are likely to always rely on both legal and extra-legal factors. It focuses on identifying, in the abstract, possible extra-legal factors which may amount to incentives and constraints placed by the current ecosystem of arbitration on arbitral decision-making.

Keywords: arbitration, decision-making, legal realism, law and economics, adjudication

JEL Classification: K33, K41

Suggested Citation

Schultz, Thomas, Arbitral Decision-Making: Legal Realism and Law & Economics (May 18, 2015). Journal of International Dispute Settlement, 2015, Vol 6; King's College London Law School Research Paper No. 2015-28. Available at SSRN: https://ssrn.com/abstract=2607594

Thomas Schultz (Contact Author)

King's College London ( email )

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University of Geneva ( email )

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Genève, CH - 1205
Switzerland

Graduate Institute of International and Development Studies (IHEID) - Geneva Center for International Dispute Settlement (CIDS) ( email )

Villa Moynier
Rue de Lausanne 120b
Geneva, 12011
Switzerland

Graduate Institute of International and Development Studies ( email )

Geneva
Switzerland

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