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Judicial Equity Can Be Imperfect (continued)

Traditional Arbitration Can Also Lead to Unfair Results

L

ike equity, arbitration has its roots in the earliest civilizations, where people asked tribal leaders to resolve their disputes. Plato wrote about arbitration among the ancient Greeks, and in England, merchants often turned to arbitrators rather than courts. In the earliest days of the United States, the Jay Treaty with Britain provided for arbitration to resolve disputes arising from the American Revolution.

Arbitration has often been used by businesses that need a decision maker with special technical knowledge. But today, arbitration is a popular way of resolving all types of business disputes, and business contracts often contain a clause requiring the parties to arbitrate.

Arbitration is popular because it is widely viewed as faster and cheaper than filing a lawsuit in court. There are fewer disputes over rules and procedures, the discovery process is streamlined, and the arbitration hearing is less formal than a court trial.

However, when the parties live in different countries, or even in different states within the U.S., a traditional arbitration can still be expensive and create unsatisfying results.

Many arbitrators are retired judges or lawyers with experience in a particular field. Most are only familiar with the laws of the locality where they are licensed to practice law. Like judges in a courtroom, they will decide cases based on legal principles and precedents. If the parties live in different countries, the arbitrator will decide which country's laws to apply.

This means that traditional legal arbitration decisions – like court decisions – may be based on legal technicalities that may not seem fair or just. They may favor one party by applying the laws of that party's home state or country. Lawyers may still wage expensive battles over procedural issues such as which country's law to apply. And the case may not be resolved for months, or even years.

Continue reading (page 7 of 7) …Equity Arbitration and net-ARB: A Fairer AlternativeEquity Arbitration with net-ARB      


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