Business Courts and the Future of Arbitration

Abstract

The future of arbitration depends not only on arbitration but also on its competitors—the public courts, including business courts. The creation of business courts incorporates some of the preferred characteristics of arbitration (in particular, expert decision making and expedited case management) into litigation, making litigation a more effective competitor to arbitration. Litigation in business courts has some advantages over arbitration (such as lower upfront costs), while arbitration retains some of its advantages over litigation (such as choice of decision maker and confidentiality).

Given this structural comparison, one would expect on the margin for business courts to make litigation a more attractive forum for resolving business disputes than arbitration. But the limited empirical evidence available does not show any significant move away from arbitration to business courts as yet. Certainly the analysis here does not resolve as an empirical matter the potential effect of business courts on the future of arbitration. Rather, my hope is to begin the discussion, and to prompt others to examine the issue more systematically.