Arbitration and Access to Justice: Economic Analysis

Omri Ben-Shahar, Professor of Law at the University of Chicago Law School, has written a thoughtful paper entitled Arbitration and Access to Justice: Economic Analysis, University of Chicago Institute for Law & Economics Olin Research Paper No. 628 (January 2013). In his paper, Professor Ben-Shahar argues that mandatory arbitration clauses in contracts generally benefit most consumers. He also states that limiting access to arbitration in favor of a courtroom often provides an advantage to only the most elite consumers.

Here is the abstract:

Mandatory arbitration clauses in consumer contracts are widely regarded as problematic because they limit consumer’s access to judicial forums, to fair procedures, and potentially to any kind of remedy. But rather than looking at consumers as a group, I examine which sub groups of consumers are affected by this limitation more than others. I argue that in most circumstances, access to courts benefits the elite, not the weak. It is a species of open-access policy that has an unintended regressive effect. Paradoxically, rules that limit the use of pre-dispute arbitrations clauses hurt, rather than protect, weaker consumers, as they mandate a regressive reallocation. I also consider the role of class actions, and whether weak consumers are potentially the indirect beneficiaries of class action litigation. This argument has theoretical merit, but it, too, is limited in ways that are often unappreciated.

This and other scholarly articles written by Professor Ben-Shahar may be downloaded without charge from the Social Science Research Network.