Journal Article

Arbitral Decision-Making: Legal Realism and Law & Economics

Thomas Schultz

in Journal of International Dispute Settlement

Volume 6, issue 2, pages 231-251
Published in print July 2015 | ISSN: 2040-3585
Published online June 2015 | e-ISSN: 2040-3593 | DOI: https://dx.doi.org/10.1093/jnlids/idv014
Arbitral Decision-Making: Legal Realism and Law & Economics

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  • Arbitration
  • Private International Law and Conflict of Laws
  • Public International Law
  • Settlement of Disputes

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As the social impact and role of international arbitration receives increasing attention, one central theme in this conundrum gains prominence: how do arbitrators decide cases? What influences arbitral decision-making? With the progressive opening of scholarship in the field to interdisciplinary approaches and studies going beyond doctrinal work, the question often takes the following form: do arbitrators apply the law, or do they make decisions based on something else—personal preferences, political biases, etc? When empirical studies fail to find significant statistical evidence of the role of extra-legal factors in their decision-making, the conclusion is drawn that arbitrators do, indeed, nothing else than apply the law. This article argues that the question so posed is an argumentative fallacy. Using the epistemology of legal realism and a simple methodology of law & economics, this article maintains that arbitrators, like every dispute resolver, are likely to always rely on both legal and extra-legal factors. It focuses on identifying, in the abstract, possible extra-legal factors that may amount to incentives and constraints placed by the current ecosystem of arbitration on arbitral decision-making.

Journal Article.  11459 words. 

Subjects: Arbitration ; Private International Law and Conflict of Laws ; Public International Law ; Settlement of Disputes

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