CHAPTER 8 HOW TO ACHIEVE THE ADVERTISED BENEFITS OF ARBITRATION
| Jurisdiction | United States |
(Mar 1984)
HOW TO ACHIEVE THE ADVERTISED BENEFITS OF ARBITRATION
Munger, Tolles & Rickerhauser
Los Angeles, California
1. Introduction
It is a high privilege for me to be invited to appear before the Rocky Mountain Mineral Institute. During my lifetime, I have only been invited to one other Rocky Mountain event. Periodically, the proprietor of the pool hall in my hometown, Manilla, Iowa — who also happened to be the best cutter in town — would hold a Rocky Mountain Oyster Feast. Although the Rocky Mountain oysters were free, we had to buy our own beer. I am pleased that this Rocky Mountain event included the drinks.
My home town of Manilla has another connection to this speech. My interest in alternative dispute resolution was cultivated there. Manilla is a town of about 800 people. It is located about four miles east from Buckgrove, four miles west from Aspinwall and two miles north of Astor. It is a town that never had any court house. In fact, it never had any lawyers. But out behind that same pool hall where the oyster feasts were held, we had a whole lot of alternative dispute resolution going on. And I studied it very carefully.
Before I turn to arbitration, the alternative technique that I am to focus on, let me make a confession. Through the
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years I have probably handled 250 lawsuits but no more than maybe six or eight arbitrations. Whether that experience enhances or diminishes my expertise, I am going to leave to you. But it does lead me to my first point — that arbitration is really only one of several techniques for dispute resolution.
2. Arbitration Is One Of Several Dispute Resolution Techniques
Arbitration is well-suited for some and poorly suited for others. Very briefly, let me give you my philosophy of dispute resolution and try to put arbitration in context. I start from the premise that dispute resolution involves a wide variety of techniques. The techniques are part of a continuum with the most sophisticated jury trial on one end and the simple two-party negotiation down on the other end. Strung along the line in between, you have conciliation, mediation, mini-trial, arbitration, summary jury trial and other techniques yet to be invented. Each has its strengths and each has its weaknesses. There is also an interdependency between them.
Even though I believe strongly in wider use of alternatives, litigation is, and will remain, fundamental to all alternatives and to our system of dispute resolution. Litigation establishes the norms, the basic rules of fairness by which alternative techniques are able to work. Bob Mnookin, a Stanford law professor, said it best, when he wrote of
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"bargaining in the shadow of the law." By that he meant that the basic rules of fairness developed in courts of law influence the results obtained through negotiation and other alternatives. As a result, the judicial system gives integrity to the alternative system. Because of the interrelationship between adjudication and alternatives, the sophisticated dispute resolver needs to be prepared to deal with a whole panoply of dispute resolution techniques. One should not consider himself only a litigator or only a mini-trial or arbitration specialist. Rather, one has to be prepared to analyze what techniques best match the dispute at hand.
3. When Is Arbitration Appropriate
Now let me turn to arbitration and discuss some of the factors that bear on the suitability of arbitration. The first factor to consider is the nature of the relationship between the disputants. If the disputants are strangers, arbitration may not work as well as if they have a continuing relationship, such as that between employers and employees, between suppliers and customers, or between members of a unit agreement for oil and gas production. Because the preservation...
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