1 Jun 2010

Precedents in Arbitration?

The entire common law system works on the theory of precedent where a ruling in one case is often considered as binding (or at least persuasive) in a subsequent case with similar fact circumstances. However the system only recognizes judicial decisions as the source of precedents in a some jurisdictions in particular only Courts of Records are considered as vested with the authority in as much as their decisions are considered as binding precedents. It is in this background that one can safely conclude that a ruling of an arbitral tribunal (which does not carry out the State's judicial function unlike a court), would not be considered as precedent. 

It this background it is interesting to note the views of W. MARK C. WEIDEMAIER in his paper entitled "TOWARD A THEORY OF PRECEDENT IN ARBITRATION" in which he seeks to explore and lay out a theoretical foundation for considering arbitral rulings are precedents. The abstract states as under;

Do arbitrators create precedent? The claim that they do not recurs throughout much of the arbitration literature. Instead, arbitration often is viewed as an ad hoc forum in which arbitrators do justice (at best) within the confines of particular cases. As an empirical matter, however, it is increasingly clear that, in some arbitration systems, arbitrators often cite to other arbitrators, claim to rely on past awards, and promote adjudicatory consistency as an important system norm. Much like courts, then, arbitrators can (but do not always) create precedent that guides future behavior and provides a language in which disputants, lawyers, and adjudicators can express and resolve grievances.
This Article provides a theoretical foundation for understanding the conditions under which precedent will (or will not) arise in arbitration. It identifies three considerations that may account for the development of precedent across a range of arbitration systems: (1) whether the system is structurally conducive to the creation of precedent; (2) whether arbitral precedent benefits the parties by filling gaps in (or displacing) state-supplied law; and (3) whether arbitrators are likely to be viewed as legitimate producers of law within the relevant context. After explaining the relevance of these considerations, the Article explores how they might apply in different arbitration contexts and sets forth a research agenda capable of shedding light on arbitration not only as a mechanism for resolving disputes, but also as a mechanism for generating robust systems of privately made law.
An interesting reading.  

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