By: Paul F. Kirgis
Arbitration may be conceptualized either as a species of
adjudication or as a species of contract. In the former
model, the arbitrator is a private judge, hired by the parties but
tasked with performing the same sorts of functions that public
judges normally perform: finding facts and applying
predetermined rules (normally legal rules) to those facts in order
to assign rights and obligations. In the latter model, the
arbitrator is a “contract reader,” serving as the parties’ agent
designated by them in advance to supply the terms of their
agreement that they did not foresee and that are necessary to
resolve a conflict between them.
Scholars concerned with the expansion of binding contractual
arbitration into public law areas such as employment discrimination
have argued that arbitration should be subject to the requirements
of due process. Application of due process to arbitration
would almost certainly require some degree of judicial oversight
beyond the minimal judicial review currently allowed. Courts
have resisted those calls, in part by invoking the contractarian
model of arbitration. Courts insist that arbitration is a
purely private matter and that no state action is involved because
court enforcement of arbitral awards is equivalent to court
enforcement of private contracts generally.
In this article, I argue that rigorous application of the
contractarian model would require significantly greater judicial
review of arbitral awards than courts have acknowledged.
Under the contractarian model, the award is the equivalent of a
contract term agreed upon by the parties ex ante. When an
arbitrator issues an award that denies a claimant rights the
claimant could have enforced in court, the claimant can be
understood to have waived its rights with respect to that
claim. That waiver functions, in effect, like an exculpatory
contract. Basic principles of contract law hold exculpatory
contracts unenforceable in many areas, including intentional torts
and the provision of medical services, in which arbitration is most
controversial. I contend that these principles compel
heightened judicial review of arbitral awards in those areas.