Competition Between State Courts and Private Tribunals

21 Pages Posted: 25 Feb 2020

See all articles by Horst Eidenmueller

Horst Eidenmueller

University of Oxford; European Corporate Governance Institute (ECGI)

Date Written: February 7, 2020

Abstract

In this essay, I investigate the competition between state courts and private tribunals for dispute resolution. I distinguish between different market segments: B2B and B2C transactions and, in each case, small-, medium- and high-stakes disputes. The analysis is informed by a survey of the dispute resolution preferences of “case placers” carried out in 2015. I find that competition between state courts and arbitral tribunals is currently most intense with respect to high-stakes B2B disputes. A significant portion of the total dispute resolution volume in this market segment goes to arbitration. If parties decide to arbitrate, they do so primarily because of the effective international enforceability of an award, the autonomy to choose competent and neutral arbitrators and the confidentiality of the proceedings. Speed and costs of the proceedings are much less relevant. Commercial arbitrations are usually administered by an arbitral institution. The choice of institution is primarily influenced by its reputation as a professional case manager and by prior positive experiences of the parties. I argue that access to arbitration should be made easier with respect to B2C small- and medium-stakes disputes. The trend in the European Union of promoting conciliation/mediation for the resolution of these disputes should be reversed. Arbitration is less “dangerous” for consumers because it is a legal process governed by fundamental due process guarantees. By contrast, conciliations/mediations are not subject to these guarantees, and they are not well suited for the enforcement of mandatory consumer rights. No compelling case can be made to increase access of businesses to arbitration in medium-stakes B2B disputes. Arbitral institutions have high-powered incentives to design new and efficient procedures for these types of disputes. Technological innovations will reinforce the trend towards privatizing dispute resolution. This poses unique regulatory challenges for the protection of weaker parties, especially consumers.

Keywords: Competition, Regulatory Competition, Courts, Arbitration, Arbitral Tribunals, Arbitral Institutions, Mediation, Conciliation, Empirical Analysis, Market Developments

JEL Classification: K4

Suggested Citation

Eidenmueller, Horst G. M., Competition Between State Courts and Private Tribunals (February 7, 2020). Oxford Legal Studies Research Paper No. 3/2020. Available at SSRN: https://ssrn.com/abstract=3534025 or http://dx.doi.org/10.2139/ssrn.3534025

Horst G. M. Eidenmueller (Contact Author)

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
39
Abstract Views
137
PlumX Metrics