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Arbitration vs. Government Courts

Summary:
By: Peyton Gouzien Navigating the Judicial System can be a difficult endeavor for those unfamiliar with, untrained in, and inexperienced with legalistic language, court procedures, or even the resources for attorneys who are. This mixed with the often broad nature of the law makes the United States a highly litigious society with legal fees and spending on legal matters accounting for 2.2% of domestic GDP. This follows as Civil court cases take upwards of two years just to get a court date and are long drawn out processes once you get to court. As a direct result of intense Judicial Bureaucracy, we find the U.S. with a judicial system that confuses and delivers inadequate and inequitable results to its users. So does an alternative exist? Citizens of the United States are indeed bound by

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By: Peyton Gouzien

Navigating the Judicial System can be a difficult endeavor for those unfamiliar with, untrained in, and inexperienced with legalistic language, court procedures, or even the resources for attorneys who are. This mixed with the often broad nature of the law makes the United States a highly litigious society with legal fees and spending on legal matters accounting for 2.2% of domestic GDP.

This follows as Civil court cases take upwards of two years just to get a court date and are long drawn out processes once you get to court. As a direct result of intense Judicial Bureaucracy, we find the U.S. with a judicial system that confuses and delivers inadequate and inequitable results to its users.

So does an alternative exist? Citizens of the United States are indeed bound by the rulings and laws of its legal system but in the procedure of how we resolve legal conflicts, there is a practiced alternative that seeks to avoid the long costly court battles of today.

Arbitration is that way, a legal process of out-of-court settlements of disputes between parties through a third-party arbitrator that is faster and more cost-effective than litigation. How is it faster and more cost-effective? Arbitration imposes set time limits and more streamlined approaches to evidence gathering and presentation that provide a cost-effective and timely decision to disputes between parties.

Some do argue its limitation is evidence gathering is a hindrance to the presentation of facts. The problem with this criticism is that the court’s “advantage” comparatively is the rules of evidence that will omit evidence that may be extremely relevant, but doesn’t fall into a red-tape standard of what they expect from evidence. The “flaws” in arbitration are avoidable, as arbitration relies heavily on the ability of arbitrators and to a lesser extent the parties involved’s knowledge of the issue they are in arbitration over.

Arbitration does have its limitations, specifically in what Arbitration can apply to and when. Since Arbitration is an attempt to seek a resolution to conflicts between two parties, criminal wrongdoings, such as theft or murder would not be under the scope of arbitration, as the desired outcome is not equitable outcomes in conflict resolution, but punishment and restitution for violent harm. Though even in some civil scenarios drawbacks can be observed.

To demonstrate, divorce proceedings are often an ugly process and this is usually because of a criminal component to the case. Around 25% of divorces are because of domestic violence in the relationship, a situation that finding a resolution that did not involve punishment and restitution is nearly impossible for good reason.

That still leaves 75% of divorces that are in fact not due to criminal reasons that could and should fall under arbitration. As previously established, litigation becomes a costly and time-consuming endeavor with its confusing and dense procedure that does not create outcomes that serve both parties’ interests, even when they are not mutually exclusive.

If someone gets a divorce simply for the fact they feel no love for the other partner, why should they endure a long costly battle, when Arbitration would deliver an outcome favorable to both parties? Most divorces will fall into this level of intensity that sees better dispute resolution than in trial proceedings.

The final limitation of Arbitration, however, is that its ability to be binding is tenuous at best. Arbitration works best when it is final and binding, as it incentivizes parties to reach equitable outcomes promptly for the both of them, rather that they can continue to appeal and sue or delay proceedings to “wait out” the other party or find some legal loophole where they can come out on top. The problem today lies in that if a party does not like an outcome of arbitration they can just take the issue to court if the Arbitration is non-binding, which many are. In binding arbitration, both parties agree not to sue one another as a condition of a successful arbitration, but binding arbitrations are only ever seen in an employee, employer context, as arbitration is agreed to before a dispute.

In most arbitrations, appeals can be made to the courts to change the outcome of the arbitration. The process is wrapped in the same judicial bureaucracy which holds down our civil courts and skews outcomes towards those with wealthy lawyers who can find loopholes in the thousands of pages of legal procedure and understand legalistic language.

The reasoning for the State’s insistence on hindering arbitration as an alternative to the courts is exactly because it demonstrates a lack of need for them. Why use a clunky, more expensive service that is a gamble between a favorable result and an untenable result, when the alternative is cheaper, easier to understand, and delivers better results on the whole?

The government is forced to compete with the private sector or alternative forms of conflict resolution and as competition does, it reveals the inefficient and less valuable service and it is then outcompeted by the services that are efficient and more valuable in the eyes of its consumers.

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The Mises Institute, founded in 1982, teaches the scholarship of Austrian economics, freedom, and peace. The liberal intellectual tradition of Ludwig von Mises (1881-1973) and Murray N. Rothbard (1926-1995) guides us. Accordingly, we seek a profound and radical shift in the intellectual climate: away from statism and toward a private property order.

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