Arbitration Trends

II.ARBITRATION TRENDS

Arbitration is here to stay. The momentum behind resolving disputes by arbitration is only increasing. North Carolina courts recognized decades ago that arbitration has advantages over traditional civil litigation.[1] Benefits of arbitration include the following: reducing court dockets; increasing speed and economy; promoting finality; and allowing the parties more control over who will resolve their disputes.[2] The North Carolina General Assembly has found that “court-ordered, nonbinding arbitration may be a more economical, efficient, and satisfactory procedure to resolve certain civil actions than traditional civil litigation” and authorized its use in various civil actions.[3]   Furthermore, our courts have explained that “[p]ublic policy favors arbitration because it represents an expedited, efficient, relatively uncomplicated, alternative means of dispute resolution, with limited judicial intervention or participation, and without the primary expense of litigation—attorneys’ fees.”[4]

While judicial and legislative enthusiasm for arbitration has continued to rise, the real groundswell in arbitration is in the business world.  Arbitration has long been used in business, but it has not been used anywhere near the extent it is today. Professor Katherine Van Wezel Stone of Cornell Law School, in an extensive law review article that addressed, among other things, the proliferation of private arbitration clauses into consumer transactions, notes that “[a] major reason for the surge in consumer arbitration is widespread dissatisfaction with the civil justice system, with its problems of delay, expense, technicality, and judicial gridlock.”[5] A business world grown disillusioned with the courts is attempting to cure a moribund legal system by injecting arbitration into nearly every aspect of consumer life. Mandatory arbitration clauses are now routinely found in residential and commercial rental agreements, banking and credit card applications, and stock listings agreements, as well as within a variety of insurance policies.

[1] See, e.g., Cyclone Roofing Co., Inc. v. David M. LaFave Co., Inc., 312 N.C. 224, 229, 321 S.E.2d 872, 876 (1984). (noting the “strong public policy in North Carolina favoring arbitration[.]”).

[2] Crutchley v. Crutchley, 306 N.C. 518, 523, 293 S.E.2d 793, 796-97 (1982).

[3] N.C. Gen. Stat. § 7A-37.1 (2013).

[4] Elliot v. KB Home North Carolina, Inc., __ N.C. App. __, __, 752 S.E.2d 694, 697 (2013) (internal quotation marks and citation omitted).

[5] Katherine Van Wezel Stone, Rustic Justice: Community and Coercion under the Federal Arbitration Act, 77 N.C. L. Rev. 931, 934 (1999).

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