Empirical Research on Arbitration Outcomes
A survey of literature regarding arbitration finds opinions running to the extremes. Some authors advocate including arbitration provision in all contacts while others complain that arbitration hurts individual employees and consumers and should be oppposed.
Often, extreme views about arbitration are not based on available data. On this page, we present a compilation of empirical research about arbitration. Generally, the available research shows that resolving a dispute through arbitration compared to trial by judge or jury does not affect outcomes as much as consumer advocates and business advisors may claim. While it appears that arbitration does not generally result in a different outcome compared to trial, the empirical data indicates that the arbitration process is faster, simpler, less expensive and more satisfying than courtroom trials.
Readers who are aware of other, additional studies of arbitration that do not appear in this compilation are invited to contact us with suggested additions.
- The National Workrights Institute Study: Employment Arbitration. What Does the Data Show?: A summary of research conducted by the National Workrights Institute found that employees who settled disputes through arbitration prevailed 62% of the time as compared to a 43% win rate in court.
- Empirical Research on Employment Arbitration: Clarity Amidst the Sound and Fury? This article by Alexander Colvin from the Employee Rights and Employment Policy Journal, Vol. 11, No. 2, 2007 reviews the existing empirical research on employment arbitration and presents new findings based on analysis of data from recent American Arbitration Association employment arbitration case filings.
- 2005 Survey by Harris Interactive conduced for the U.S. Chamber of Commerce Institute for Legal Reform This survey found wide satisfaction among individuals who chose arbitration over litigation to resolve a dispute. The independent survey was conducted among 609 adults who had participated in a binding arbitration case that reached a decision. Results from the final report, showed that when comparing arbitration to litigation: 74% of respondents found arbitration to be faster; 63% of respondents found arbitration to be simpler; 51% of respondents found arbitration to be less expensive; and 66% percent of respondents said they would likely use arbitration again.
- Outcomes of Arbitration. An Empirical Study of Consumer Lending Cases This study on consumer lending cases conducted by Ernst & Young found that consumers found the arbitration process to be beneficial in resolving legal claims, and that reports that consumers are disadvantaged by contractual arbitration are erroneous.
- Consumer and Employment Arbitration in California This Report from the California Dispute Resolution Institute in August 2004 reviewed the results of 1,559 consumer and employment arbitrations. The Institute found that the median time to resolve a dispute by arbitration was 104 days and that the median cost of resolving these disputes by arbitration was $870. By comparison, cases involving consumer goods and employment claims take 650 to 720 days to be resolved court, according to the National Center for State Courts, indicating that arbitrating disputes is approximately 85% faster than litigating similar claims.
- ABA Section of Litigation Task Force Survey On Arbitration In 2002-2003, the ABA Section of Litigation Task Force surveyed trial lawyers regarding various ADR processes. When comparing arbitration to litigation, 78% of those surveyed said that arbitration was timelier than litigation, and 56% said that arbitration was more cost effective than litigation.
- 2004 Summary of Empirical Study Results from the National Arbitration Forum
- An Empirical Study of Dispute Resolution Mechanisms: Where Do Plaintiffs Better Vindicate Their Rights?: In this article published in the Dispute Resolution Journal (2003/2004), Michael Delikat and Morris Kleiner compare the results of jury trials in federal court in the Southern District of New York with the results in NASD securities arbitrations. Their findings contradict charges that private arbitration programs are "structurally biased" against employees who have civil rights claims. The authors found that in arbitrated and litigated employment cases completed during the same period, claimants had a higher success rate in the arbitrations than they did in litigated cases in federal court.
- Employment Arbitration and Litigation: An Empirical Comparison: This paper by Theodore Eisenberg and Elizabeth Hill compares adjudicated and arbitrated outcomes in the class of disputes most often the subject of arbitration, non-civil rights employment claims, using a unique database of American Arbitration Association employment dispute awards. For higher paid employees, the authors found little evidence that arbitrated outcomes materially differ from trial outcomes. The authors found no statistically significant differences between arbitration and litigation in employee win rates or in median or mean award levels. The authors also report evidence that arbitrated disputes conclude more quickly than litigated disputes.
- The Economics of Litigation and Arbitration: An Application to Franchise Contracts: This Article from the Journal of Legal Studies by Keith Hylton and Christopher Drahozal presents empirical research in the context of franchise disputes.
- AAA employment arbitration: A fair forum at low cost: This article summarizes a statistical study by Elizabeth Hill of employment arbitration under the auspices of the American Arbitration Association. Her results, which were published in Ohio State's Journal on Dispute Resolution in 2003, indicate that mandatory employment arbitration is not biased in favor of employers and that it is fair and affordable to lower-income employees.
- Dispute Resolution Statistics from Financial Industry Regulatory Authority: Updated statistics on securities arbitrations with this financial industry regulatory authority.
- Report to the Securities and Exchange Commission Regarding Arbitrator Conflict Disclosure Requirements in NASD and NYSE Securities Arbitrations This 2002 study by Professor Michael Perino of St. Johns University School of Law found that consumers fared well in securities arbitrations. Reviewing more than 31,000 arbitrations from 1980-2001, Professor Perino found that consumers prevailed in nearly 53 percent of cases. In comparison, plaintiffs in stockholder suits prevailed only 32 percent of the time in federal court.
- Employment Arbitration: Is It Really Second Class Justice?: This Article by Lewis Malty of the ACLU reports empirical research that, in the aggregate, employees do not fare worse in arbitration than courtroom trials.
- The Same Result As In Court, More Efficiently: Comparing Arbitration And Court Litigation Outcomes: A 2006 Article by Mark Fellows published in Metropolitan Corporate Counsel.
- Securities Arbitration: How Investors Fare This 1992 study by the GAO is now somewhat dated now but summarizes a great deal of research into securities arbitration. The primary finding was that research showed no statistical pro-industry bias.