Arbitration’s Arbitrage: Social Solidarity at the Nexus of Adjudication and Contract

Abstract

The displacement thesis, which frames the current debate about arbitration, seems to commit a category error. Arbitration is not intelligible only as a stand-in for adjudication. Instead, the truth about arbitration is much more subtle and more variegated. In some cases, arbitration does indeed stand in for court-provided processes of dispute resolution, including adjudication. I shall call such arbitration "third-party arbitration" or "arbitration as judging." But in other cases, arbitration replaces party-provided processes of dispute resolution, which possess their own immanent legitimacy, and in particular supplants the bargaining that precedes contracting. For reasons that will become apparent, I shall call this arbitration "first-party arbitration" or "arbitration as gap-filling." These two types are fundamentally different in both their immanent structures and the grounds and limits of their proper use. Each must be analyzed separately in order properly to be understood.