Customers were much less likely than “non-customers” to perceive the arbitration panel as open-minded (27.97% vs. 49.43%), much less likely to perceive the arbitration panel as impartial (24.84% vs. 47.82%) and, ultimately, much less likely to view the arbitration process as fair (27.84% vs. 50.64%). Indeed, 60% of customers disagreed with the statement “I have a favorable view of securities arbitration for customer disputes,” and 61% disagreed with the statement that “[a]rbitration was fair for all parties.” . . . Participants with recent experience in a civil court case also were asked to compare the fairness of securities arbitration with the fairness of the court process. A whopping 75.55% of customers found that arbitration was “very unfair” (62.96%) or “somewhat unfair” (12.59%) when compared with their court experience.
Another post from the ADR Profs blog discusses a broader issue:
Are our [Article III] judges entirely independent and impartial? Of course not. But in a signficant number of cases, the judicial functions of deciding cases and facilitating settlement are being performed by people who could be viewed as even less likely to be independent and impartial. These are what I call “embedded neutrals”—e.g., administrative judges who are employees or contractors of the very agencies whose policies and practices are being challenged by citizens; arbitrators who serve because the repeat players (i.e., employers, retailers, banks, credit card companies, manufacturers) have selected their own trade associations or particular ADR organizations for inclusion in boilerplate contracts; and mediators admitted to agencies’ panels because they possess the particular experience and/or knowledge that the agencies value. As ADR has been institutionalized–and now just as much a lucrative private business as a public service or avocation–it is easy to imagine the potentially corrosive influence of money and access on impartiality, or at least on the maintenance of a reasonable appearance of impartiality.
Also a survey of lawyers for big businesses shows that they are less than thrilled about the value of arbitration in international cases, which have traditionally received the least public policy criticism:
About 75% if the participants perceive that international arbitration and litigation cost about the same; only 9% perceive that international arbitration costs less than litigation. . . “the overall trend among the survey respondents seems to be that international arbitration is not seen as offering significant cost benefits over litigation.” Meanwhile, 78% of the participants perceive that it takes just as much time to reach disposition in international arbitration as it does in litigation.
Employees also fare poorly in arbitration (at least in California where disclosures of arbitration results are required by law):
[In American Arbitration Association] arbitrations that occurred as a result of clauses in employer-promulgated agreements . . . employees won only 19.7% of their cases. Employees did even worse when they faced employers who were repeat players, winning only 13.9% of these cases. They won 32% of the time when they faced one-shot employers. Employees’ odds were worst when their opponent was a repeat player-employer who used the same arbitrator more than once. Then, employees won only 11.3% of the time, compared to a win rate of 21.2% in cases that did not involve a repeat employer-arbitrator pair.
These findings are consistent with earlier research which has found that employees arbitrating pursuant to arbitration provisions contained in personnel manuals or handbooks have relatively low win rates. In contrast, employees arbitrating as a result of individually negotiated contracts do quite well. In one study, they won 68.8% of the time. In another, they won 61.3% of their cases. The employees arbitrating pursuant to individually negotiated contracts tend to be highly-paid managers and executives. The employees arbitrating pursuant to personnel manuals or handbooks are likely to be lower-paid and lower-ranking employees. . . . 15-25% of all employers have now adopted employment arbitration. Meanwhile, the rate of unionization in the United States was only 12% in 2006. . . . “employment arbitration is likely already a more widespread system for governing employment relations than collective bargaining and labor arbitration.” . . . the mean award for employees was $23,233 (including the many cases in which no damages were awarded to the employee), the mean arbitrator fee was $10,351 in cases that involving a hearing and award.
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