Originially from: World Arbitration and Mediation Review (WAMR)

Costs and Value of Arbitration
by
Lisa Brener*
Part Two
The United States Case Law on Arbitration Costs
The past five years have witnessed a growing body of case law concerning the costs of
arbitration, largely in response to federal court rulings which state that statutory rights may be
the subject of arbitration. If employees and consumers are now subject to mandatory arbitration
as consideration for employment, services, and goods, then who must pay the fees that, in many
cases, exceed those that will be incurred in the judicial proceeding which they waived or which
was waived for them?
1997: Cole v. Burns
In Cole v. Burns International Security Services,1 the D.C. Circuit was presented with an
issue that had not previously been addressed by the U.S. Supreme Court: whether an employer
can “require an employee to arbitrate all disputes and also require the employee to pay all or part
of the arbitrators’ fees….”2
Cole worked as a security guard at Union Station in Washington, D.C. When a new
company took over the contract to provide security, Cole and the other employees were required
to sign an agreement that gave the employer the option to arbitrate any future employment
disputes that might arise. The agreement provided that arbitration would be “in accordance with
the rules of the American Arbitration Association.”3 The agreement did not expressly address
the question of to whom the arbitration costs would be allocated.
The court reasoned that an employee cannot be made to pay a judge’s salary, and
therefore should not be required “as a condition of employment, to pay an arbitrator’s
* Lisa Brener received her Juris Doctor from Louisiana State University Law School, where she was a member of
the Order of the Coif and received the American Jurisprudence Award for Excellence in Contracts. She served for
two years as career law clerk to U.S. District Judge Morey L. Sear in the E.D. La., and practiced law for fifteen
years in the areas of commercial and employment litigation. She has served as a mediator and an arbitrator. She is
currently completing an L.LM. in International and Comparative Law at Tulane Law School, New Orleans, La.