Commercial Arbitration and Settlement: Empirical Insights into the Roles Arbitrators Play

Thomas J. Stipanowich, Academic Director of the Straus Institute for Dispute Resolution, William H. Webster Chair in Dispute Resolution, and Professor of Law at the Pepperdine University School of Law, and Zachary P. Ulrich, Research Fellow at the Straus Institute for Dispute Resolution, recently published Commercial Arbitration and Settlement: Empirical Insights into the Roles Arbitrators Play, 6 Penn State Yearbook on Arbitration and Mediation 1 (2014); Pepperdine University Legal Studies Research Paper No. 2014/20.  In their publication, the authors examine the evolving role of arbitrators in the context of commercial arbitration.

Here is the abstract:

A wide-ranging new Straus Institute for Dispute Resolution Survey of experienced arbitrators, conducted with the cooperation of the College of Commercial Arbitrators, reflects the growing professionalization of commercial arbitration, increasing competition for cases, and many other trends in arbitration practice. It also shows that a grower percentage of arbitrated cases are being settled prior to award or to the start of hearings, and offers a strong rationale for greater emphasis on the role of arbitrators in setting the stage for or facilitating settlement. Early settlement of a dispute can be a uniquely effective way of minimizing cost and cycle time in dispute resolution, but the role of has not been given significant attention. Survey data indicate that the incidence of settlement varies widely among arbitrators, and suggest that some experienced arbitrators do not perceive their arbitral role as extending to the promotion of settlement. On the other hand, many experienced arbitrators are conducting themselves as proactive managers of the case before them, and many perceive a connection between their activities and settlement. One of the most effective means by which arbitrators “set the stage” for settlement is by ruling on dispositive motions. Other arbitrators have taken more direct action in facilitating settlement, sometimes by serving as both a mediator and an arbitrator with respect to a dispute. This article considers the function of settlement in the quest for economy and efficiency in dispute resolution and various approaches aimed directly at promotion of settlement, such as stepped dispute resolution, creative variants, and “med-arb.” It examines ways in which techniques featured in recent initiatives promoting more cost-effective and expeditious arbitration may also lay the groundwork for settlement; in addition, it explores the more contentious proposals put forward by the CEDR Commission on Settlement in International Arbitration. The article summarizes new Survey results showing a recent increase in the incidence of pre-hearing and pre-award settlement in arbitration, as well as Survey responses reflecting experienced arbitrators’ differing perspectives toward their role respecting informal settlement. Among other things, it focuses on the activities some arbitrators regard as setting the stage for settlement, particularly their handling of dispositive motions in arbitration; it also briefly considers the more controversial approach involving a single individual serving the dual roles of mediator and arbitrator. It concludes with straightforward proposals to stimulate appropriate involvement by arbitrators as well as attorneys and other “stakeholders” in setting the stage for settlement.

This and other scholarly papers authored by Professor Stipanowich and Mr. Ulrich may be downloaded free of charge from the Social Science Research Network.

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