Originally from World Arbitration And Mediation Review (WAMR)

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GROWING PAINS: BUILDING AMERICAN

ARBITRATION’S LEGITIMACY THROUGH
EVERYDAY ARBITRAL DECISIONS
John Burritt McArthur*

I. INTRODUCTION: STORM CLOUDS ON THE AMERICAN ARBITRATOR’S
HORIZON: HALL STREET AND THE AFA

Arbitration is an unusual procedure because it draws on the
state’s compulsory enforcement power, yet is invoked only if the
parties choose to arbitrate rather than go to court. This dual
nature means that arbitration has legitimacy in part if courts are
willing to enforce awards but, unlike regular court proceedings,
also if parties continue to agree to use this displacing, voluntary,
parallel dispute-resolution procedure.

Fueled by the traditional desire for a low-cost, quick
alternative to courts and enhanced by many corporations’
eagerness to handle repetitive, often small claims outside the
normal judicial process, arbitration has spread rapidly in the
United States during the last few decades. Its increasing use can
be seen in the fact that, while the American Arbitration
Association (AAA), traditionally the country’s largest arbitration
administrator, “settled” only 500 cases in its first two years in the
1920s, it was handling 137,000 cases a year by 2006.1 The
National Arbitration Forum (NAF) — a relative upstart founded in
1986 — claims to have processed an astounding 214,000
arbitrations in the same year.2 By this measure, arbitration
appears to be a great success in the United States.