Originally from the American Review of International Arbitration (ARIA)

PREVIEW

I.    INTRODUCTION

If dispute resolution were a category on the game show Jeopardy, “What is arbitration?” would be the correct response to the answer: “A process that allows parties to a business dispute to resolve their matter by the use of a third-party expert decision-maker they choose pursuant to a process they design, and more quickly and economically than they could in court.” Arbitration is the go-to solution for businesses to get knowledgeable decision-makers to resolve their disputes faster, more economically, and with greater privacy than they can in court.  Indeed, the American Bar Association (“ABA”) passed a resolution in February 2021 supporting “the use of arbitration of business-to-business disputes, both domestically and internationally, as an efficient and economical method of dispute resolution.”  

Yet, listening to the media, commentators and the courts, one could easily think that commercial arbitration has become an obsolete tool for dispute resolution. This is simply not true.  The only thing that has become obsolete—or more correctly was never true in the first place—is the view that the benefits of arbitration are somehow self-effectuating. 

The International Institute for Conflict Prevention & Resolution (“CPR”), an independent, 501(c)(3), not-for-profit organization formed in 1977, by general counsels of global companies seeking to, among other things, resolve legal conflicts more effectively and efficiently, submits this article both to reaffirm the ABA’s resolution and to call on commercial arbitration users to make the choices necessary to seize the benefits they seek from arbitration.  In so doing, arbitration will allow businesses to spend less time and resources on conflict, and more on their business purposes.  It also will serve the public interest by freeing judicial resources, which are more sapped than ever by the backlog of cases that have been piling up from the COVID-19 pandemic. 

In its resolution, the ABA lays out seven reasons why businesses choose arbitration over the courts to resolve their commercial disputes. Each reason represents an important feature of the commercial arbitration process that enables parties to resolve their disputes with less business disruption. Turning these opportunities into a reality, however, requires careful choices and assertive trade-offs. 

Part II of this article reasserts the benefits commercial arbitration offers businesses, as outlined by the ABA Resolution. Part III briefly reviews the public and judicial backlash against arbitration, and alerts readers to the evolving measures available for parties to realize more of the benefits and original promise of business-to-business, or B2B, arbitration. 

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This paper seeks to remind commercial users of specific steps they can take and tools they can use in the lifecycle of a dispute to realize arbitration’s fullest potential to resolve B2B disputes. It is only by understanding that arbitration is not self-effectuating, but instead requires methodical process design and tradeoffs, that users can achieve a dispute resolution process, saving their organization money and time, while giving them a chance to preserve important business relationships.