TL;DR: In this paper, the authors extend the behavioral analysis of the legal system to private judging, and consider the implications of that analysis for the debate on pre-dispute consumer arbitration clauses.
Abstract: Much attention has been given to how cognitive illusions - both heuristics and cognitive biases - affect decision making by juries. Less, albeit increasing, attention has been given to how cognitive illusions affect decision making by judges. Almost no attention, however, has been given to how cognitive illusions might affect decision making by arbitrators. This article extends the behavioral analysis of the legal system to private judging, and considers the implications of that analysis for the debate on pre-dispute consumer arbitration clauses. Empirical evidence on the effect of cognitive illusions in arbitral decision making is extremely limited. Further complicating the analysis of private judging are structural differences between arbitration hearings and jury trials, which may heighten or dampen the effect of cognitive illusions on decision making in the real world. If arbitrators are assumed to be more like judges than jurors in their decision making - a seemingly reasonable assumption - studies comparing the effect of cognitive illusions on judges and jurors provide at least a starting point for making predictions about arbitral decision making. On this view, the article reaches the very tentative conclusion that arbitrators, like judges, may be less susceptible to at least some cognitive illusions than jurors. If subsequent research bears out this tentative conclusion, it would have important implications for the ongoing debate over consumer arbitration. If arbitral decision making is less subject than jury decision making to the effects of cognitive illusions, then the use of arbitration may improve the accuracy of dispute resolution, reducing the risk of overcompensation (rather than resulting in undercompensation). This is not to suggest that such utilitarian arguments should be used to override constitutional protections, or that the jury might not serve other functions than simply dispute resolution. Instead, the point simply is that when Congress (or another policy maker) is considering whether to restrict the enforceability of consumer arbitration agreements, it should not assume that juries necessarily make "better" decisions than arbitrators. To the contrary, restricting the availability of arbitration may reduce the accuracy of dispute resolution, thereby imposing real costs on the parties to consumer contracts.
TL;DR: In this article, the authors identify four key challenges which a winning party seeking the enforcement of an electronic award according to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, the “New York Convention” (NYC).
Abstract: When arbitration is conducted online, some inherent, fundamental issues arise which could potentially undermine the enforceability of the final award under the provisions of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, the “New York Convention” (NYC). The study identifies four key challenges which a winning party seeking the enforcement of an electronic award according to the NYC might face with relation to the enforcement of that award: the validity of electronic arbitration agreements, the enforceability of consumer arbitration agreements concluded online, obstacles arising out of the conduct of the arbitration procedures online and the issue of electronic authentication of the final award.
The study first critically analyses the NYC, to identify some key problems in relation to each of the said issues which might compromise or undermine the enforcement of awards rendered in online arbitration; it then makes suggestions as to some possible amendments to the NYC. The study then goes on to consider these issues in the context of the applicable law before the Dubai and DIFC Courts as the enforcement courts, to examine their ability to enforce such an award. The study concludes with several recommendations for both practice and law reform in the jurisdictions discussed, in relation to each issue.
The study is original in that it is the first comprehensive analysis of all the said issues, from formation of the arbitration agreement, through various stages of online procedures, to the final enforcement of the award, within the examined jurisdictions. Further, the recommended changes would help to improve the efficiency and reliability of the courts of Dubai and DIFC with regard to the enforceability of an award given via online arbitration. This is a particularly important issue in light of the current and anticipated growth in the prominence of the identified jurisdictions as financial and business centres, the centrality of international arbitration to international business and the fundamental need for confidence in the enforceability of the courts and arbitration awards.
TL;DR: The Arbitration Fairness Act of 2007 (AFTA) as discussed by the authors has been used to restrict the extensive use of pre-dispute consumer arbitration clauses, which has been shown to seriously disrupt the role of the courts and the ability to effectively enforce consumer law.
Abstract: Congress is currently considering the Arbitration Fairness Act of 2007. This article is a copy of my testimony in support of this Act. In my testimony, I argue that consumer arbitration has the potential to seriously disrupt the role of the courts and the ability to effectively enforce our consumer law. The only effective way to curtail the extensive use of pre-dispute consumer arbitration clauses is an outright ban.
TL;DR: This paper analyzed nearly 5,000 complaints filed by consumers with the American Arbitration Association between 2009 and 2013 and found that frequently-arbitrated entities win more and pay less in damages than one-shot entities.
Abstract: For decades, mandatory consumer arbitration has been ground zero in the war between the business community and the plaintiffs’ bar. Some courts, scholars, and interest groups argue that the speed, informality, and accessibility of private dispute resolution create a conduit for everyday people to pursue claims. However, others object that arbitration’s loose procedural and evidentiary rules dilute substantive rights, and that arbitrators favor the repeat playing corporations that can influence their livelihood by selecting them in future matters. Since 2010, the stakes in this debate have soared, as the U.S. Supreme Court has expanded arbitral power and mandated that consumers resolve cases that once would have been class actions in two-party arbitration. But although the Court’s jurisprudence has received sustained scholarly attention, both its defenders and critics do not know how it has played out behind the black curtain of the extrajudicial tribunal. This Article offers fresh perspective on this debate by analyzing nearly 5,000 complaints filed by consumers with the American Arbitration Association between 2009 and 2013. It provides sorely-needed information about filing rates, outcomes, damages, costs, and case length. It also discovers that the abolition of the consumer class action has changed the dynamic inside the arbitral forum. Some plaintiffs’ lawyers have tried to fill this void by filing numerous freestanding claims against the same company. Yet these “arbitration entrepreneurs” are a pale substitute for the traditional class mechanism. Moreover, by pursuing scores of individual disputes, they have inadvertently transformed some large corporations into “extreme” repeat players. The Article demonstrates that these frequently-arbitrating entities win more and pay less in damages than one-shot entities. Thus, the Court’s consumer arbitration revolution not only shields big businesses from class action liability, but gives them a boost in the handful of matters that trickle into the arbitral forum.
TL;DR: A brief history of large-scale arbitration can be found in this paper, where Stolt-Nielsen S.A. v. AnimalFeeds International Corp. is considered.
Abstract: Chapter 1 Introduction I. Introduction II. A Brief History of Large-Scale Arbitration III. Uses of Class, Mass and Collective Arbitration Chapter 2 Rules and Procedures I. Introduction II. Initiation of Class, Mass or Collective Arbitrations III. Procedures Chapter 3 Is Large-Scale Arbitration Really Arbitration? I. Introduction II. The Question Arises - Stolt-Nielsen S.A. v. AnimalFeeds International Corp. III. Distinguishing Class, Mass and Collective Arbitration From Other Multiparty Proceedings IV. Class, Mass and Collective Proceedings and the Nature of Arbitration V. Do Class, Mass or Collective Arbitration Change The Nature Of Arbitration? VI. Forward-Looking Concerns Chapter 4 Interpreting the Arbitration Agreement I. Introduction II. Interpretation of Arbitration Agreements in Cases Involving Class, Mass and Collective Claims III. Interpreting Agreements That Are Silent or Ambiguous Regarding Class, Mass or Collective Treatment IV. Waivers of Class, Mass or Collective Treatment Chapter 5 Regulatory Elements of Class, Mass and Collective Arbitration I. Introduction II. Large-Scale Litigation as a Form of Regulation III. Regulatory Arbitration IV. Regulatory Arbitration in Context Chapter 6 The Future of Class, Mass and Collective Arbitration I. Introduction II. Relative Benefits of Class, Mass and Collective Proceedings III. New Forms of Class, Mass and Collective Arbitration IV. Creating an Enforceable Arbitration Agreement for Class, Mass or Collective Disputes Chapter 7 Enforcement of Class, Mass and Collective Awards I. Introduction II. Issues Regarding International Enforcement of Large-Scale Arbitral Awards III. Issues Regarding National Enforcement of Large-Scale Arbitral Awards IV. Conclusion Appendix Spanish Statute on Collective Consumer Arbitration