With this article, Mr. Cogan won the $500 prize offered annually by the Eastman Arbitration Library for the best article on commercial arbitration by a second- or third-year student of a law school. He is a student at the University of Texas, and will be a teaching quizmaster during the current academic year.
During the era of economic laissez faire when government duties were few, the role of the state was considered to be primarily that of a policeman. The state seldom participated in the affairs of the market place. The ancient concept of sovereign immunity gave force to the idea that the public welfare would be adversely affected if the state could be sued without its consent. Even when this immunity was waived and the state allowed itself to be sued, the need for an extra-judicial mode of settling disputes did not exist in the days when a state's commercial activities were minimal. When government participation in the economy became more pronounced, however, dissatisfaction with the long road through the administrative and judicial quagmire increased. The advantages to be gained by including arbitration agreements in government contracts became evident as the use of such agreements in private commercial contracts found acceptance. In addition to the conceptual difficulties which surrounded early attempts to enforce arbitration agreements between private parties, unique problems were encountered when a government body was party to the contract. These unique difficulties are the subject of this paper.