The Lost Promise of Arbitration

Abstract

This article disputes the notion that arbitration, a historically informal process, tends to disadvantage minority disputants or provide them with quick decisions tainted by prejudice. Responding to Richard Delgado’s seminal work, Fairness and Formality: Minimizing the Risk of Prejudice in Alternative Dispute Resolution, this article attempts to shed greater light on the benefits of modern arbitration for minority disputants. Although still capable of improvement, arbitration may well provide greater protections to minority disputants than does litigation. Since Delgado first wrote his article, the use of arbitration as a primary dispute resolution mechanism has increased dramatically, particularly among businesses and employers. As arbitration expanded, critics of the informal process worked to reform arbitration so that it provided sufficient protection to disputants who were compelled to use it. Modern arbitration provides a more formalized and structured process that resembles litigation, but continues to offer resolution more efficiently and cheaply. Assuming Delgado’s premise — that formality matters in promoting equality in dispute resolution — arbitration’s enhanced formalism suggests significant promise for reformers who seek to improve minorities’ fair and effective representation in dispute resolution. This article opens the dialogue for further innovation by proposing impactful changes to the arbitration process. These reforms would include such improvements as mandatory reasoned opinion-writing and greater diversity in arbitrator appointments. In turn, these process-based reforms would enhance arbitration’s formalism and thereby improve its protection for minority disputants and any other party likely to be at a disadvantage in a dispute resolution venue. This contemporary perspective on arbitration fosters a fair and equitable dispute resolution mechanism for those with less bargaining power than their opponents.

Keywords: alternative dispute resolution, ADR, arbitration, diversity

JEL Classification: K3, K4, K41