Reflections on the State and Future of Commercial Arbitration: Challenges, Opportunities, Proposals – Vol. 25 No. 3-4

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Author: Thomas J. Stipanowich*

Published: April 2015

How effective is arbitration as a method for resolving commercial disputes, and what are the prospects for its future use? These questions are likely to prompt very different responses from business users and the lawyers who serve them, mirroring widely varying attitudes regarding arbitration. Whatever one’s perspective, it is apparent that commercial arbitration systems are in a process of dynamic evolution that presents distinct challenges as well as manifold opportunities for the users of these consensual processes and those who provide services as counselors, advocates, arbitrators and institutional arbitration providers.

The author was recently invited to offer reflections on the future of business-to-business arbitration to the College of Commercial Arbitrators, an organization of more than two hundred of the most experienced arbitrators in the United States. The invitation prompted an assessment of the current “state” of commercial arbitration as variously experienced and perceived in the United States and internationally, a consideration of apparent barriers to the use of arbitration and countervailing opportunities for tailoring arbitration to serve business goals, and reflections on its future in an increasingly globalized and technology-driven world.

At a time when a study co-sponsored by the American College of Trial Lawyers bemoans the costly and cumbersome “one-size-fits-all” template of U.S. litigation and calls for more careful tailoring of adjudicative process to dispute, arbitration, which is a choice-based, inherently flexible process, would appear to be the most obvious alternative. Many corporate counsel appreciate the opportunities afforded by the many kinds of process choices inherent in arbitration. At one recent conference, for example, representatives of stakeholders in the health care industry spoke enthusiastically about their role in creating a customized, streamlined payor-provider arbitration program tailored to the unique requirements of their relationship.

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*William H. Webster Chair in Dispute Resolution, Professor of Law and Academic Director, Straus Institute for Dispute Resolution, Pepperdine University School of Law. Professor Stipanowich thanks the College of Commercial Arbitrators and its Executive Committee (Ty Holt, Eugene Farber and Edna Sussman) for the research grant that facilitated the design and implementation of the Survey described in this Report. He is indebted to Zachary Ulrich, Pepperdine J.D., M.D.R. (2013), who as Straus Institute Research Fellow played a significant role in the refinement and implementation of the CCA/Straus Institute Survey and to the following individuals who offered helpful comments or criticisms: Peter Benner, Jack Coe, Randy Kiser, Jeff Paquin, Don Philbin, Deborah Rothman, Colin Rule, Curt von Kann, and Nancy Welsh. Of course, unless otherwise noted all conclusions are those of the author. Thanks also go to Pepperdine School of Law Research Librarian Tiffani Willis, as well as Mohammed Sweify, candidate for the LL.M. in International Commercial Arbitration; Mark Lemke, candidate for the LL.M.  in Dispute Resolution; and Hao Wu, Masters in Dispute Resolution, Straus Institute/Pepperdine University School of Law (2014); Hsuan Li and Jessica Tyndall, Pepperdine School of Law Class of 2014; and Matthew O’Brien, Pepperdine School of Law Class of 2015, for research support.