Public Litigation, Private Arbitration?
12 Pages Posted: 8 May 2018
Date Written: April 26, 2018
How should legal disputes be allocated between litigation and arbitration? Given strong incentives for many actors to arbitrate everything, the question turns fundamentally on the scope of arbitration under the applicable law. In "Re-Inventing Arbitration: How Expanding the Scope of Arbitration Is Re-Shaping Its Form and Blurring the Line Between Private and Public Adjudication," Professor Deborah Hensler and Damira Khatam posit that the "public" or "private" nature of a dispute provides the key to whether it belongs in arbitration. While arbitration of private disputes is ok, disputes with "public policy dimensions" belong in the courts. Hensler and Khatam therefore suggest that Congress override Supreme Court decisions mandating arbitration of employment and consumer disputes, which, they contend, would restore domestic arbitration to its proper sphere.
But can disputes really be divided into public and private categories that provide the key to whether they belong in arbitration? This Response suggests that on close examination it is exceedingly difficult to identify a reliable proxy for the public or private nature of a dispute. The absence of such a proxy suggests there is an inescapably political dimension to how disputes are allocated between litigation and arbitration. Whether a category of disputes should be heard in a public court because the disputes impact the public interest turns out to depend on contested judgments about where the public interest lies. This, in turn, suggests a more fundamental reason for Congress to revisit the scope of arbitration under the Federal Arbitration Act. If the allocation of disputes between litigation and arbitration is an inescapably political question, it should ideally be addressed by an institution accountable to democratic politics.
Keywords: arbitration, Federal Arbitration Act
JEL Classification: K40, K41
Suggested Citation: Suggested Citation