Originally from Law and Practice of Arbitration - 4th Edition

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1. The Early “Hostility”

In the nineteenth century, U.S. law and courts were hostile to arbitration. This attitude was characteristic of legal systems at this time. In most countries, courts were unwilling to relinquish their adjudicatory prerogatives and have their functions performed by untrained and unqualified individuals. Judges considered arbitration to be makeshift justice. Courts, therefore, were unwilling to compel parties to arbitrate. In the polite but unmistakably clear words of Mr. Justice Story,

[w]hen [courts] are asked to . . . compel the parties to appoint arbitrators whose award shall be final, they necessarily pause to consider whether such tribunals possess adequate means of giving redress, and whether they have a right to compel a reluctant party to submit to such a tribunal, and to close against him the doors of the common courts of justice, provided by the government to protect rights and to redress wrongs.1

Under U.S. law, the agreement to arbitrate was not legally binding until the arbitral proceeding had been concluded and the arbitrators were ready to render or had rendered the award. It was, in effect, the classic options contract. It became binding once it had been performed. Unlike English courts, which reviewed the merits of awards through the case-stated procedure,2 courts in the United States expressed their antagonism toward arbitration by creating a policy pursuant to which the arbitral clause was subject to unilateral rescission at any time prior to the rendering of an award. This judicial policy obviously compromised the remedial effectiveness and functionality of arbitration.