Liberty Under God PROVIDES BETTER Justice Without "the State"
How would courts of justice be maintained without "the government?"
This question was asked by William C Wooldridge in his book, Uncle Sam, the Monopoly Man. Here is chapter five, entitled,
Voluntary Justice
ON MONDAY THE TWELFTH OF MAY, SIX HUNDRED AND eighty-three years ago, William of Lawford abandoned hope of settling his quarrel with Reginald of Northampton. William and Reginald were merchants who had fallen out over the sale of a horse at the famous fair of St. Ives, England . They had decided on a price of five marks for William's horse, and also apparently agreed that Reginald could pay with goods, not surprising since specie was often hard to come by in the Middle Ages. Reginald then had given William a bolt of ray, valuable shiny cloth. Immediately the deal was chilled, for Reginald, having no doubt that the cloth was worth five marks, demanded his new horse, while William indignantly denied the ray could possibly bring that sum and refused to hand over the steed.
Lex Mercatoria - the Law of Merchants "Lex Mercatoria" is a legal phrase which has come to signify the power of a stateless society to prevent most disputes and resolve those that arise in a peaceful, harmonious and orderly way -- without dependence upon political institutions such as monarch, crown, parliament or congress.
Thereby, in 1287, appeared all the elements that have classically paved the way for a commercial lawsuit—disgruntled seller, unhappy buyer, disagreement over the value of goods. But these men did not hie away to the closest King's judge. Merchants like William of Lawford and Reginald of Northampton took advantage of a private court, the Fair Court of St. Ives. There they carried their dispute, and there it was speedily set tied by townspeople and other merchants like themselves. The "citizens, burghers, and merchants" of St. Ives appraised the cloth at only two marks. Reginald could not produce the other three, so he did not get his horse. Furthermore, the appraisers found that the horse was worth merely three marks. That meant William would have come out two marks ahead if he had sold it for five, so he was awarded the cloth as well as the horse, to give
him the value of his abortive bargain, something lawyers would take another few hundred years to analyze and name a party's "expectation."
All this went on in a "court" that was purely voluntary, in fact, extralegal; neither King nor Parliament imposed the rules it followed or enforced the decisions it made. Wherever merchants regularly gathered, a few among their number were selected to resolve their quarrels, and a booth set apart at the crowded dusty fair to which disputants could, if they wished, have recourse. The courts moved with the merchants, and consequently earned the appellation "piepowder," or dusty-footed.
Sovereign unto themselves, these merchant courts settled most of the important trading disputes of England and of much of Europe for several hundred years, completely outside the framework of the common law. And they also from time to time adjusted questions that had little or nothing to do with commerce. When Maud Ledman accused Thomas Barber of "using vile words against her" and "taking her by the shoulder and throwing her into a certain well," she resorted to the same Fair Court of St. Ives that had looked after William of Lawford's horse trade the year before.
It is a little surprising to find so much important litigation being handled in this fashion. Compulsion—the persuasive knock of the sheriff—could be called upon to enforce only the decisions of the country's official courts, and so one would expect people to use those courts when they could not come to terms between themselves. The merchants' courts were voluntary, and if a man ignored their judgment, he could not be sent to jail. If the loser disagreed with a Fair Court 's decision, he could theoretically take his case into an official court and start over from the beginning. Nevertheless, it is apparent that Fair decisions were generally respected even by the losers; otherwise people would never have used them in the first place. "The hand-clasp is mightier than the fist," the American Arbitration Association asserts, and the sentiment may well make up
in truth what it lacks in literary elegance.
Merchants made their courts work simply by agreeing to abide by the results. The merchant who broke the understanding would not be sent to jail, to be sure, but neither would he long continue to be a merchant, for the compliance exacted by his fellows, and their power over his goods, proved if anything more effective than physical coercion. Take John of Homing, who made his living marketing wholesale quantities of fish. When John sold a lot of herring on the representation that it conformed to a three-barrel sample, but which, his fellow merchants found, was actually mixed with "sticklebacks and putrid herring," he made good the deficiency on pain of economic ostracism.
The system worked. In the volumes of legal artifacts meticulously edited under the sponsorship of the Selden Society, scores of representative cases decided over a period of several hundred years are reported. Merchants became a law unto themselves.
The complete circumvention of official courts, one of the oldest and best established of civilized institutions, and the voluntary forfeiture of what would seem to be the most fundamental and essential characteristic of any court—the ability to enforce its judgments with legal coercion—present interesting questions about just what it is people want in the way of justice. Scholars have devoted a great many hours and a great many pages to investigating the Fair Courts' success, and the beginning of the answer, at least, is self-evident: medieval merchants must have considered their interests better served by voluntary submission of disputes to one of their own number than by formal common-law actions. Fair Courts had obvious advantages of speed and economy, especially to men who in a few weeks would be returning to their homes perhaps a thousand miles away or
moving on to another of the great European fairs.
Equally important was the way in which merchant courts went about making their decisions. Consider again William of Lawford's horse trade. The whole case turned on how much the horse was worth and how much the cloth was worth. The court appointed expert appraisers to make the determination on the spot; no such simple resolution could be had at common law. The more technical the issue, the greater the advantage of having it worked out by those in the trade rather than by outside judges.
Official courts were hamstrung by rules that made them particularly unappealing to merchants. Such courts, for instance, would not handle disputes involving contracts made overseas, an impossible situation which led to the custom of claiming that various foreign towns were located in English shires. If a trader made a deal in Honfleur, France, he might solemnly allege that the transaction occurred in Honfleur in the County of Kent, England ; the judge went along with the fiction or deprived the trader of a remedy. If the agreement provided for interest, no matter how low, official courts regarded it as usurious. Or suppose the man being sued claimed he had already paid and brought in his books of account to show the debit. Common-law courts would not even look at such evidence, though among merchants it had high standing.
Today men condescendingly smile at the idiosyncrasies of the common law as merely another side of the benighted Middle Ages. But common-law judges did not think themselves peculiar or archaic. Quite the contrary, they could congratulate themselves and their predecessors on the great progress of the law since Anglo-Saxon days, when a trial consisted merely of a general oath-swearing called a compurgation; if enough people denied a debt was due, it was not due, period. That kind of procedure had little appeal for practically anyone, so the official Anglo-Saxon courts were virtually ignored, and voluntary arbitration became the customary mode of settling disputes long before the Norman Conquest.
By comparison, medieval procedure could pride itself on rationality and progressiveness. But it simply did not change as fast or act as fast as commerce required. Voluntary courts, on the other hand, could accommodate their procedure to the needs of the moment and the desires of their patrons. In official courts, changing a particular rule or adapting a particular reform only substituted a new rigidity for the old and meant that the next day another rule and another reform would have to be equally laboriously wrought out. The rules had to apply to everyone, and too many interests had to be satisfied simultaneously in a sovereign's courts for them to satisfy any particular interest very well. Justice should be blind, but that handicap seriously limits its efficiency. Affording protection needed in one in a hundred cases means incurring cost, inconvenience, and delay
in the other ninety-nine.
Take, for example, the hearsay rule. This principle excluded merchants' account books from evidence for hundreds of years in common-law courts, although the common-sense Fair Courts always allowed such records to be used. In modern times, common-law courts finally began to accept business entries in evidence as an exception to the hearsay rule, but the original practice has not yet been so cleanly exorcised from the law that judges can ignore it. Exceptions to old rules become new rules which make courtrooms only that much more arcane. Consequently businessmen are still avoiding courtrooms when they can.
Whether because of the courts' inertia or expense or unfairness or complexity, for practically as long as there is legal history there is a parallel history of recourse to voluntary extralegal forums to settle disputes. There, on the basis of their own private requirements, the parties can make their own law and their own procedure directly, rather than mediately, through the legislature. They can avoid the expense of procedural protection they do not need, and the inconvenience of laws they do not like. So in Athens five and a half centuries before the birth of Christ arbitration was favored; Maimonides urged it on his followers; George Washington insisted in his will that any disagreements about it were not to be taken into court, but were to be submitted to three impartial men, who were to make their decisions "unfettered by law or legal construction"
solely on the basis of what they thought the writer's intentions had actually been.
And so today a far greater volume of disputes than most people realize are settled by voluntary private "courts," probably many more than are actually litigated. The Fair Courts of the Middle Ages have their successor in the arbitration process resorted to daily by businessmen of every description. The impetus behind this development strikingly recalls just the problems that led to analogous results six and seven hundred years ago.
The modern history of arbitration begins with the American Civil War. With the blockade of the South, a great many contracts involving the purchase, delivery, and resale of cotton were thwarted. Ships became unavailable or were sunk trying to run the blockade. Prices leaped and tumbled unpredictably. Neutrality and contraband-of-war laws introduced further complications. Insurance policies, if obtainable at all, carried complex provisions that had to be reinterpreted to determine their application to every new contingency. The sum of it all was a swamp of contract claims the courts would have taken years to untangle, and then perhaps not resolved consistently or to the general satisfaction of the trade.
Voluntarily united in the Liverpool Cotton Association, the merchants of Liverpool who handled the great bulk of the trade agreed to insert an arbitration clause in all their contracts, avoiding the necessity of resort to the courts for settling the inevitable disputes. Arbitration proved so successful in adjusting differences without the expense, inconvenience, and hard feeling of suits that other Liverpool commercial associations took up the device, first the Corn Trade Association and then the General Brokers Association.
The movement spread to London very shortly. First the great staple dealers—corn, oil seed, cotton, coffee—then the stock dealers and produce merchants, and finally professional associations of architects, engineers, estate agents, and even auctioneers adopted the practice of regularly inserting an arbitration clause in every contract to which they were a party, guaranteeing that the transaction, however sour it went, would never see a court.
By 1883 a correspondent of the London Times could write that "whole trades and professions have virtually turned their back" on the courts, a remarkable national transformation to have occurred in only twenty years. Once the "private courts" were tried, their advantages quickly became apparent, and the London mercantile community, which only a few years before had been making tentative inquiries about Liverpool's experience with arbitration, now found itself the object of an American investigation.
Samuel Rosenbaum, who made the study, reported back to the Philadelphia Bar Society that a commercial case in a law court was a thing of the past in England . He found European arbitration, which was merely a compulsory first step in the judicial process, relatively unsuccessful; in England arbitration worked, he concluded, because it was voluntary, entirely extra-governmental right down to the critical question of who would be the judge. Arbitrators handled thousands of cases a year, and the practice was gradually spreading out from the trade associations that had initially popularized it.
Glowing reports such as Rosenbaum's helped arbitration expand in the United States around the turn of the century. The practice was already familiar, but relatively unexploited: the New York Chamber of Commerce had been appointing arbitration commissioners at every monthly meeting for over a hundred years. Throughout the nineteenth century, however, official courts played the major role in the settlement of commercial disputes. Only from the early 1900's did arbitration begin to attain substantial popularity in this country, but by the end of World War I it had become the preferred practice in many lines of business.
Before 1920, nowhere in the United States could an arbitrator's award be taken into court and enforced; the remedies available to an American merchant in such a case remained about the same as those of William of Lawford in 1287. Yet it was in those same years before 1920 that arbitration caught on and developed a following in the American mercantile community. Its popularity, gained at a time when abiding by an agreement to arbitrate had to be as voluntary as the agreement itself, casts doubt on whether legal coercion was an essential adjunct to the settlement of most disputes. Cases of refusal to abide by an arbiter's award were rare; one founder of the American Arbitration Association could not recall a single example. Like their medieval forerunners, merchants in the Americas did not have to rely on any sanctions other than those they could collectively
impose on each other. One who refused to pay up might find access to his association's arbitral tribunal cut off in the future, or his name released to the membership of his trade association; these penalties were far more fearsome than the cost of the award with which he disagreed. Voluntary and private adjudications were voluntarily and privately adhered to, if not out of honor, out of the self-interest of businessmen who knew that the arbitral mode of dispute settlement would cease to be available to them very quickly if they ignored an award.
One of the major American propagandists for arbitration, Owen D. Young, comparing the experience of Europe (which enforced arbitral awards in the courts) with America (which did not), concluded that the most compelling sanction was not legal, nor even economic, but the private moral censure to which a violator would be subjected. That sounds wildly, almost laughably, Utopian, but it came not from a philosopher but from a Chamber of Commerce man who was interested in the best way to get things done.
Now legislation has formalized what had long been the norm: binding settlements. An arbitrator's award is enforceable in court in all fifty states, and twenty-four have a uniform statute under which a court will automatically carry out the award unless whoever is objecting to it can show that it is fraudulent. From the campaigns of fifty years ago arbitration has grown to proportions that make the courts a secondary recourse in many areas and completely superfluous in others. The ancient fear of the courts that arbitration would "oust" them of their jurisdiction has been fulfilled with a vengeance the common-law judges probably never anticipated. Insurance companies adjust over fifty thousand claims a year among themselves through arbitration, and the American Arbitration Association (AAA), with headquarters in New York and twenty-five regional offices
across the country, last year conducted over twenty-two thousand arbitrations. Its twenty-three thousand associates available to serve as arbitrators may outnumber the total number of judicial personnel—federal, state and local—in the United States, but certainly exceed by many times the number of federal judges. Add to this the unknown number of individuals who arbitrate disputes within particular industries or in particular localities, without formal AAA affiliation, and the quantitatively secondary role of official courts begins to be apparent. Marx would presumably be pleased to note that, Judicially, the new state, or rather non-state, has already taken root in the vitals of the old, grown up, and largely supplanted it. Among businessmen, official courts have been displaced by private agencies as a means of settling the majority of day-to-day disagreements.
The judicial system of the political state is now in competition with another system devised by merchants, suggested Wesley A. Sturges over forty years ago. Now peaceful and even symbiotic coexistence has replaced competition. The "political state" itself occasionally prefers private arbitration to its own judicial system: the AAA is often called upon to conduct union representation elections under the National Labor Relations Act, and it has even been enlisted by the Office of Economic Opportunity to supervise the selection of poor peoples' representatives, whom Congress wished to be members of anti-poverty agencies at the local level. The proposed postal legislation discussed in Chapter Two yields a more far-reaching point. Certain labor disputes between the Postal Corporation and its employees, if not resolved within the organization, would be referred
to the American Arbitration Association for final settlement. If enacted, the government in many cases involving contract interpretation would be voluntarily denying itself the use of its own courts.
The courts themselves display a friendly disposition towards arbitration. English judges used to be less benign. Scott v. Avery, the case that in 1856 set a precedent for judicial enforcement of agreements to arbitrate, explained the judges' prior antipathy in very basic terms. "As they had no fixed salary, there was great competition to get as much as possible of litigation into Westminster Hall, and a great scramble in Westminster Hall for the division of the spoil." The more cases that went to arbitration, the fewer fees that went to judges. Today, by contrast, the last problem in the world likely to be facing any court is a shortage of cases.
In New York in the 1920's, when the idea of arbitration was rapidly catching on, twenty-seven thousand cases clogged the state courts' calendars, and it took five years for a case to come to trial, with no prospect of early determination even then; one celebrated case had been in progress for thirteen years. For all practical purposes, the system of governmental judicial administration had broken down, except for a litigant with unlimited funds and patience. In some large cities today the problem remains as bad, or worse; courts are too overburdened to cope with their job, except with great delay. The tradition of arbitration, on the other hand, has always been speed, ever since medieval merchants required that complaints be answered in an hour or a day and that final decisions be handed down by the third tide. In New York today, it may take four and one-half
years to come to trial in a routine automobile accident case; arbitration can be completed in four to eight weeks. It is not too much to say that official courts can function, even as slowly as they do, because of the breathing space permitted them by arbitration. If every legal dispute went to court, the logjam might sink the judiciary altogether, so it is more than willing to see arbitrators getting a bigger and bigger share of its business.
"This upward movement," recounts an enthusiast, "has been distinctively by businessmen, and not by statesmen, legislators, or lawyers." So it has always been: William Langland's Piers Plowman in the fifteenth century boasted of his competence as an arbitrator though "in canon or in decretal I cannot read a line." That is to say, he was altogether ignorant of the law. To American businessmen, who have held fixed opinions about the undesirable characteristics of lawyers ever since colonial times, the arbitrator's nonlegal expertise may be his greatest recommendation.
In avoiding judges, people who turn to arbitration of necessity escape the law itself, for a man who knows no law cannot be expected to hand down a decision in conformity with it. In other words, the system of extralegal, voluntary courts has progressed hand in hand with a body of private law; the rules of the state are circumvented by the same process that circumvents the forums established for the settlement of disputes over those rules.
During the 1930's, when political scientists and politicians sought new worlds for government to conquer, the widening domain of arbitration began to strike some commentators as anomalous, and even dangerous. The intellectual climate did not favor private judicial preserves, and critics for the first time began to recognize the profoundly antistatist implications of arbitration. A lone Canadian writer, noting that Hitler's accession had stayed the growth of arbitration in Germany, saw a larger lesson: "For the totalitarian state, with its doctrine of the all-enslaving power of the state ... arbitration means an attempt by private individuals to free an important part of their activities from the dominating yoke of the governing group." That argument, however, did not appeal to several American observers, who believed that official encouragement of extralegal
dispute settlements was an abdication of the state's prerogatives at a time when they should be expanded. The feeling against arbitration merged with the prevalent distrust of other manifestations of private enterprise. A Harvard Law School student warned that "it is untimely to cast aside this socialized orderly process [of official courts] for the laissez faire individualism of lay arbitration." In context it is apparent that "laissez faire individualism" is pejorative, and a socialized process is held up as the ideal.
A good deal of insight accompanied the antipathy of such skeptics, for they recognized and commented on aspects of arbitration that had hardly even occurred to its original proponents, particularly its silent displacement of not only the judiciary but even the legislature. With horror the critics concluded that in arbitration the law was simply abandoned. Consider, for instance, the very common rule that in breach-of-contract cases the aggrieved party can collect only the losses he actually suffers or a reasonable advance estimate of them (liquidated damages). If a pepper dealer contracts with a merchant to pay damages plus a penalty of two percent, the merchant cannot collect the penalty in court—the agreement to pay it is against the law. But if the contract contains an arbitration clause, an arbitrator can (and in an actual case did) assess the
"illegal" two percent penalty. In short, a private agreement between two people, a bilateral "law," has supplanted the official law. The writ of the sovereign has ceased to run, and for it is substituted a rule tacitly or explicitly agreed to by the parties.
"Law," however, presumably binds all the people all the time. If an arbitrator can choose to ignore a penal damage rule or the statute of limitations applicable to the claim before him (and it is generally conceded that he has that power), arbitration can be viewed as a practically revolutionary instrument for self-liberation from the law, "incompatible with general concepts of positive law," Professor Henrich Kronstein distressfully observed: the phenomenon challenged his whole view of the legal order. No theory, he concluded, can obscure the essential lawlessnesss of this form of "private government."
Now the theoretical issue brought to light for the first time by Depression-era statists has become largely moot, for modern codes often specify that individual parties may vary the codes' provisions by agreement, thereby bestowing the imprimatur of the state upon "laws" privately agreed to by particular businessmen or companies. Just as official courts have welcomed the relief afforded by the private alternatives, official statute-framers have gladly accommodated their handiwork to the undeniable fact of private law. More than that, the lawmakers have recognized that the specificity of a privately negotiated contract term or "law" is superior to a rule that by its very definition must be universally applicable, and hence cannot discriminate among particular needs and particular occasions. The Uniform Commercial Code, a widely adopted set of laws
pertaining to commercial transactions, favors the private alternative by allowing businessmen both to pick the set of laws that will govern their dealing (whether of Michigan or New Mexico, for example, when a buyer lives in Michigan and a seller in New Mexico) and to vary particular Code provisions by agreement. Neither option would have been available at common law; legislatures now, by contrast, actually move over to make way for their person-to-person, voluntary substitutes, saving for themselves only the power to prevent outright fraud or bad faith.
Merchants have always been among the first to feel the necessity for private courts, but arbitration has never confined itself solely to commercial disputes. To return again to the Fair Court of St. Ives, the reports tell how Roger Barber undertook for nine pence to cure John, son of John of Eltisley, of baldness. John mustered enough enthusiasm for his anticipated repilation to pay Roger in advance. Roger wrapped him up in a plaster for a Tuesday and Wednesday in 1288, and, as the record laconically states, "withdrew from the vill." A chastened and still bald John sought the aid of the merchant court.
Roger Barber probably saw no good reason to submit himself to the jurisdiction of a voluntary tribunal for the obvious reason that he had little to lose by absenting himself. That hard fact has trammeled the growth of private courts outside a business context. Nevertheless, more and more noncommercial quarrels are finding their way to the arbitrator. Separation agreements, for instance, now almost routinely provide for arbitration of disputes arising over the custody and visitation rights of the respective spouses.
Noncommercial arbitration has received its most extensive application in Philadelphia, where all claims for under two thousand dollars must be arbitrated before they can be taken to court. Members of the Philadelphia bar sit on panels to hear these small claims; thus the system operates in accordance with the substantive law rather than outside it, although sessions are quite informal. It also differs from conventional arbitration in that it is nonvoluntary and an appeal is available to the courts. The Philadelphia system was instituted to take some of the pressure off the Municipal Court, and it succeeded in reducing delays there from two years or more to five months. From the improvement it is obvious that a great many complaints that formerly had to be dealt with judicially are now finally resolved by arbitration, and the figures bear out this conclusion: in
1958, of 5,740 arbitrated cases only 190 were appealed. That small percentage does not necessarily demonstrate complete acquiescence in the results in the other 5,550 cases; some claims are far too small to be worth the cost of taking an appeal to court. In fact, in some such cases, occasionally referred to by the bar as "dog-bite cases," arbitration provides a remedy where no economically feasible way of recovery previously existed. It is fair to conclude that the small number of appeals does reflect reasonable satisfaction with the way arbitration works in practice, and the Philadelphia program therefore provides some evidence that arbitration can succeed outside the ambit of the trade associations, which originally nurtured it.
Victims of automobile accidents, who today make up a major portion of almost any local court's workload, have traditionally eschewed arbitration because in court their damages could be assessed by a jury presumed to be sympathetic, or at least susceptible to the eloquence of counsel: such a jury might award many times the actual money or "special" damages to an injured driver in order to compensate him for pain and suffering and other intangibles. This attitude is not unfounded; it appears that in arbitrations under New York 's uninsured motorist statute, damages are often limited to the "specials." On the other hand, in Philadelphia one investigator has found that a plaintiff appears to have a statistically better chance of recovery by arbitration than before a jury. Indeed, some talented defense lawyers ask nothing better than a jury,
feeling that the common sense of the laymen may save their client in situations where a judge's fascination with new concepts of liability grounded in attenuated legal subtleties might, financially, hang the same client.
If it is safe to generalize from both the Philadelphia and the New York experience, it may be that juries return fewer but larger verdicts than could be had from an arbitrator.
Individuals may increasingly resort to arbitration for the same reasons that have made businessmen and corporations such firm supporters of extralegal courts: economy, speed, privacy, and expertise. Cumulatively, such advantages may well come to count for more than the possibility—it is only a possibility—of a very large jury award. If an automobile accident victim wants a jury in a major metropolitan area, it can mean a delay of, literally, years before his case even comes to trial. A trial will last for days and sometimes weeks, incurring legal expenses that can amount to a substantial fraction of the recovery, routinely one-quarter to one-third, and sometimes one-half. If technical questions are involved, litigants must take the chance that the judge and jury may not understand their explanation of them. Hours can be consumed in out-of-court maneuvering, and in
the courtroom itself, legal conventions such as evidentiary rules sometimes seem to impede rather than to forward the cause of justice. And while a party may by that time not much care, he will more often than not come out of the suit with one or more lifelong enemies. He may also, to be sure, come out with a great deal of money, a scandalously great deal, in the opinion of some. But in many cases it can hardly be worth the time and effort; whether or not justice is done, the price may be just too high and the chance of failure too great.
The Accident Claims Tribunal of the American Arbitration Association has already amassed experience and expertise in handling the routine tort claims, which remain the greatest stronghold of the courts. The sheer unmanageability of the volume of auto accident cases provides ground for a prediction that more and more of these disputes will ultimately find their way before an arbitrator.
The complexity of the legal process may succeed in driving private individuals to arbitration even if the courts' caseload does not. Suing one's neighbor is, initially, a fairly simple operation, one of the simplest known to the law. Robert Greedy engages a lawyer, explains his problem, and probably pays him a retainer. Robert's lawyer then draws up a complaint, a formal legal document stating the grounds on which the jurisdiction of the court rests and in practice reciting in considerable detail, often for several legal-size pages, what happened and what Robert wants his neighbor to do about it. A number of copies of this document are prepared, along with "certificates of service" to be returned to Robert's lawyer as evidence that Robert's neighbor has indeed received the complaint. When the papers have gone from Robert's lawyer through the Clerk of Court to
the sheriff to the neighbor and back again, the suit is officially commenced, with as few papers and as few lawyer-hours and as little complexity as almost any process known to the law. With this, now contrast the method for initiating an arbitration under a contract that specifies that means of settling disputes arising under it. The complaining party need not consult a lawyer if he does not want to; he can take a printed form out of his desk drawer (such as the AAA form here illustrated) and describe in his own words what his grievance is. The paper is then mailed to the other party, and a copy deposited along with the contract at the regional office of the American Arbitration Association. That commences the arbitration, at the cost of five minutes and a few postage stamps.
Named claimant, a Party to an Arbitration Agreement contained in a written contract, dated
which agreement provides as follows: (Quote Arbitration Clause)
icrcby demands arbitration thereunder. NATURE OF DISPUTE:
CLAIM OR RELIEF SOUGHT: (amount if any) HEARING LOCALE REQUESTED: (City and State)
You are hereby notified that copies of our Arbitration Agreement and of this De-
fcand are being filed with the American Arbitration Association at its ............ _
iiegional Office, with the request that it commence the administration of the arbitration. Under Section 7 of the Commercial Arbitration Rules, you may file an answering statement within (even days after notice from the Administrator.
Signed...
(May be Signed by Attorney)
Name of Claimant
Address.
City and State
Telephone.
Two copies of this Demand and the Arbitration Agreement must be filed, and the administrative fee paid, as provided in Section 47 of the Rules, in order to institute proceedings.
Form Used to Initiate Arbitration Under AAA Rules The process for bringing an argument before a private court is, then, infinitely more speedy and economical than that for bringing an identical dispute before an official court. Why not, one might wonder, simply reform the official procedure to bring it into line with the private methodology? That superficially sensible idea, however, is not helpful and not even really plausible. An official court, armed with the whole power of the state, including the power to bring an unwilling party before it, evict him from his home, and sell it out from under him to satisfy the court's judgments, has to have its powers circumscribed with the most elaborate and punctilious procedures to be tolerated. These niceties have evolved over hundreds of years to guarantee, for instance, that a man will not be subjected to this kind of
power without notice of what is about to happen—hence the elaborate complaint, service of it, and notice of service returned to the initiator of the action. But whatever the historical, theoretical, and practical reasons for the painstaking, measured pace of the courts, that pace also entails an abundance of two increasingly expensive commodities, paper and lawyers. A private court, on the other hand, is the voluntarily constituted tribunal of the men who stand before it. Some of the safeguards appropriate in a different context— rules of evidence, to mention one—are not necessary there.
The expenses, delays, and sometimes even injustices of official courts are the inevitable concomitant of their ultimate reliance on force. Such reliance is necessary only in an extremely small percentage of the arguments to which men have always fallen prey. For almost all the others, voluntary private courts provide a superior alternative, so superior that the state's monopoly on dispensing justice, as old as Solomon, is in reality no longer a monopoly at all, but a residual power over particularly intractable cases.
. Here is chapter five, entitled,