Q & A with Jill I. Gross, nationally-recognized expert in securities and commercial arbitration

November 12, 2019 Jill Gross
Jill Gross

Q: With ever-increasing numbers of consumers and employees having to arbitrate their claims, the media has become very critical of arbitration.  Fundamentally, do you think arbitration is a fair process?

A: Arbitration grew in popularity in the mid to late twentieth century as part of the larger “alternative dispute resolution” (ADR) movement. The hope was that different types of ADR would enhance access to justice for the average person. However, the twenty-first century narrative is that arbitration is an unfair process, especially because it has increasingly become mandatory, with consumers and employees being required to sign arbitration clauses as a condition of purchase or employment.  Further exacerbating the situation are the class action waivers often included in such mandatory arbitration agreements.  In sum, the critique is that arbitration clauses force parties—particularly those with little to no bargaining power—to prospectively waive their rights. 

I believe this narrative is an over-generalization. There are many different types of arbitration—it varies based on industry and arbitral forum.  Only some types of arbitration are unfair to parties; other types are fair.

Q: How can we tell whether an arbitration process is fair?

A: At a recent ADR symposium hosted by Fordham Law Review, I presented my most recent paper, Arbitration Archetypes for Achieving Justice. In the paper, I acknowledge the modern arbitration critique but argue that, if an arbitration process includes certain characteristics, the process is much more likely to be fair, even if one party was required to arbitrate as a condition of a contract between the parties. In particular, I identify the following key factors:

  • Both parties must be able to afford the arbitration process. If arbitration is more expensive than going through court, then the process diminishes access to justice.

  • The parties must each retain the ability to pursue the same claims, defenses and remedies that they could in court. For example, if the arbitration clause strips the parties of the right to pursue claims as a class or collective action, then the process is unfair.

  • The parties must have access to some kind of representation. Self-represented parties have a far more difficult time pursuing their claims or defending themselves in an unfamiliar process such as arbitration.

  • The arbitration outcomes must be published to ensure arbitrators are transparent and accountable in their awards.

  • If the dispute occurs in an industry where virtually all transactions are subject to mandatory arbitration, then the awards must include an explanation.

Q: Why is it so important for arbitral awards to include an explanation?

A: I recently explored this issue in an article that was just published in the Harvard Negotiation Law Review, entitled Bargaining in the (Murky) Shadow of Arbitration.  The problem is that in areas of law where virtually all disputes are resolved in arbitration (such as suitability disputes between securities brokers and their clients), almost no precedent develops because awards are private and rarely include an explanation or reasoning. The law in this area is thus very uncertain—even murky. Parties who are attempting to settle a dispute that otherwise would go to arbitration are bargaining in this murky shadow.  This weakens the legitimacy of the settlements reached—and of arbitration as a dispute resolution process.  If arbitration outcomes were published and accompanied by explanations, it would inform the settlement process for everyone, and make the entire arbitration process fairer.



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