The Lawlessness of Arbitration

19 Pages Posted: 22 Nov 2002  

Kenneth S. Abraham

University of Virginia School of Law

J.W. Montgomery III

Jones, Day, Reavis & Pogue - Pittsburgh

Date Written: December 2002

Abstract

This Essay identifies and analyzes the problems that may arise when insurance coverage disputes are subject to mandatory, binding arbitration. We argue that arbitration often involves a form of contractual "lawlessness" that is especially undesirable in claims that involve new legal issues. This lawlessness not only adversely affects the parties to each dispute, but the legal system as a whole. As a consequence, in our view insurance policyholders should be reluctant to purchase policies that require binding arbitration of coverage disputes. In addition, since the problems that we identify are likely to arise not only in insurance, where new, cutting-edge issues have regularly emerged for decades, but also in other kinds of disputes posing new legal issues, the legal system should reconsider the highly favorable stance that it takes toward mandatory, binding arbitration in general, so as to take account of the negative effects of arbitration lawlessness. A neutral legal and judicial stance toward binding arbitration would be more appropriate.

Suggested Citation

Abraham, Kenneth S. and Montgomery, J.W., The Lawlessness of Arbitration (December 2002). UVA School of Law, Public Law Research Paper No. 02-09. Available at SSRN: https://ssrn.com/abstract=353340 or http://dx.doi.org/10.2139/ssrn.353340

Kenneth S. Abraham (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States
434-924-3616 (Phone)
434-982-2845 (Fax)

J.W. Montgomery III

Jones, Day, Reavis & Pogue - Pittsburgh ( email )

One Mellon Bank Center, 31st Floor
500 Grant Street
Pittsburgh, PA 15219-2502

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