Arbitration and Rule Production

Arbitration has been criticized as displacing cases from the public courts and thereby reducing production of court precedent (the “displacement hypothesis”). Moreover, while arbitral awards might substitute for precedent, standard view is that arbitrators have little incentive to issue produce legal rules because such mostly benefit parties future disputes “positive externalities This Article critically examines both displacement hypothesis positive hypothesis. In so doing, it not only fills gaps in existing literature, but also offers new theoretical empirical insights provide groundwork a comprehensive account arbitration rule production. The begins by evaluating underlying factual predicate hypothesis: extent which used resolve relevant contracting market (defined type or types contracts likely give rise raise issues particular field jurisdiction). The then provides updated data on use clauses credit card franchise agreements, showing even ten years after Supreme Court’s decision AT&T Mobility LLC v. Concepcion many form still do include clauses, contrary predictions leading scholars. Next, partial-arbitration markets—contracting markets with some all resolved arbitration. extends analysis Marc Galanter’s Why “Haves” Come Out Ahead explain how businesses (instead settlements) avoid creation unfavorable precedent—with implication increased displace settlements rather than reduce precedent. Finally, considers arbitration-only markets. It reconsiders hypothesis, stated William Landes Richard Posner, lack reasoned awards. To contrary, interests role institutions good reason believe will those be publicly available—which, indeed, common practice today international arbitration, domestic U.S. consumer employment and, an increasing degree, commercial