Control Over Dispute-System Design and Mandatory Commercial Arbitration

Abstract

The phrase "mandatory arbitration" has come to refer to binding arbitration imposed by the stronger party on the weaker in an economic relationship through an adhesive contract clause. Critics have identified a series of concerns regarding the fairness of mandatory arbitration systems, including lack of consent, lack of due process, privatization of public law, shifting costs, and others. This Article argues that mandatory arbitration is not itself the problem. The problem is instead that in some instances, one party to the dispute has exclusive control of the design of the dispute-resolution system. Consequently, research on mandatory arbitration should concentrate on who is structuring it, how they structure it, why this is so, and how these choices affect dispute outcomes.

Keywords: arbitration, dispute systems design

JEL Classification: C70, D74