Arbitration by Combat: The Consumer-Friendly Approach America Needs

A former classmate of mine, Amanda Werner, co-authored this article with Sonia Gill for some obscure political website.  Werner and Gill and criticize corporations' practices of drafting agreements that require consumers and employees to submit to binding arbitration rather than filing lawsuits. While I thought that Werner and Gill made some interesting points, their blanket attack on arbitration is a bit overbroad.  While certain forms of arbitration may preclude class action lawsuits or favor bigger businesses over consumers, the article ignores a woefully under-discussed form of alternative dispute resolution (ADR) that avoids many problems that traditional arbitration presents.

The arbitration I am referring to is, of course, Arbitration by Combat, in which parties to a contract agree that any dispute arising under the contract shall be submitted to binding arbitration in the form of trial by combat. Under a typical agreement the parties would each select a champion from a common pool and these champions would duke it out -- likely in the form of fencing or some other form of non-lethal combat in order to avoid prohibitions on dueling that exist in several states. This form of arbitration is under-utilized, but a version of it does exist in at least one contract of which I am aware.

Werner and Gill level several criticisms against arbitration, none of which apply to arbitration by combat.  Take for example this point:

If you have a credit card or checking account, there is a good chance you have signed away your legal rights in one these rip-off clauses. The same is true if you have a cellphone, bought a car from a dealership or attended a for-profit college. Many American workers will also find themselves unable to seek relief in court when wronged by their employer. In just the past 10 years, forced arbitration clauses have become so ubiquitous in American life that many people will find they have signed away their rights without even knowing it.

Arbitration by combat is anything but ubiquitous. This form of ADR is rare enough that companies adopting it will likely grab headlines, or at least footnotes in whimsical law review articles. Consumers contracting with these innovative companies will likely be aware of the unique dispute resolution procedures they are agreeing to. In fact, customers may choose to do business with these companies because of their progressive stance towards new and exciting forms of ADR. For corporations out there reading this post, this may be something to keep in mind...

What about these other arguments against arbitration?

Arbitration substitutes an unaccountable private decision maker for an impartial judge and jury, and consumers have little opportunity to present evidence or appeal a bad decision. Unlike a public court case, an arbitration is a closed proceeding in which evidence and decisions are often kept secret, leaving law enforcement agencies, regulators and members of the public with no way to monitor systemic corporate misconduct. Forced arbitration amounts to a license to steal, since companies have little incentive to correct bad behavior if they can get away with it — and even profit from it.

. . . 

Forced arbitration is inherently biased in favor of corporations because arbitration firms rely on repeat corporate players to bring in continued business for future disputes. This dynamic encourages the well-documented “repeat player bias” in arbitration: Companies that frequently arbitrate are far more likely to prevail than consumers with a one-time complaint. After all, arbitrators cannot stay in business if they bite the hand that feeds them.

The criticism of an unaccountable decision maker does not apply to arbitration by combat because the method of resolving disputes through trial by combat relies on the skills of the combatants rather than a third party's judgment. In a typical arbitration by combat scenario, the corporation and consumer would choose from a pool of potential combatants who would then do battle with one another. The party whose champion is victorious prevails in the dispute, and the matter is resolved.

Combatants in such a system are not likely to pander to the interests of corporations or consumers. Rather, the goal of the combatants will to have as strong a track record as possible, meaning that their top priority will be to effectively represent the party that has chosen them. The problem of "repeat player bias," therefore does not apply to arbitration by combat.

Additionally, if, as Werner and Gill contend, law enforcement agencies have no way of monitoring the internal processes of arbitration, arbitration by combat participants would be able to sidestep the obstacle of illegality which may otherwise cripple the integrity of an arbitration by combat contract. Contracts may require parties to agree to the rule that the first rule of arbitration by combat is that the parties not talk about arbitration by combat, or something to that effect.

In short, while Werner and Gill's article is notable, its blanket criticism of all arbitration is unfair. I urge the authors to take a closer look at all of the benefits of arbitration by combat before simply leaping to praise "constitutional and statutory rights."