Economists as Arbitrators

Abstract

Whenever a claimant in arbitration prevails, the tribunal must calculate quantum. Indeed, sometimes the central question in arbitration is to value a disputed asset. However, an arbitrator’s expertise typically is law, not economics. How can the tribunal apply economic analysis to the question of quantum with the same intellectual rigor that it has applied legal analysis to the anterior questions of jurisdiction, liability, defenses, and the like? One way is to appoint an economist as one of the arbitrators. A second way is for the tribunal to appoint its own neutral economic expert. Either approach would expedite the arbitration by causing parties to submit more realistic estimates of quantum and to explain in a more systematic and helpful manner the robustness of those estimates and the assumptions underlying them.

Keywords: quantum, tribunal, arbitration, neutral economic expert

JEL Classification: K12, K20, O34