It’s already cliché, but worth saying anyway: The pandemic has shaken the entire legal industry. Much has been written about how the “new normal” has upended court systems, client advocacy, lawyer training, and so much more. From senior partners managing their firms virtually, to nervous 1Ls taking their introductory courses over Zoom, no corner of our tradition-bound profession has been spared from disruption.
But one slice of the industry was better prepared than most. In her comprehensive article in the Cardozo Journal of Conflict Resolution, Arbitration in the Age of COVID, Professor Amy J. Schmitz describes how private dispute resolution has met this moment. She also identifies important unresolved issues that scholars and practitioners must address as the legal world adapts to virtual adjudication.
Generally, alternative dispute resolution (“ADR”) broadly encompasses out-of-court methods for resolving conflict, such as arbitration and mediation. ADR has long prided itself on flexibility and innovation. Various forms of online dispute resolution (“ODR”) have existed for decades. Examples include chat rooms with facilitated negotiations, video-based mediations, and arbitrations conducted through electronic document submissions.
Yet until 2020, most commercial arbitrations and mediations still occurred the old-fashioned way, in physical conference rooms. But the pandemic made that impossible. No longer could witnesses travel to far-flung hearings, and no longer could groups gather in tiny rooms. Meanwhile, civil trial calendars became hopelessly backlogged. Disputants needed ways to efficiently and safely resolve their claims. The result? ODR suddenly became mainstream.
Professor Schmitz starts by tracing the development of American arbitration law. Arbitration’s modern legal foundations begin with the Federal Arbitration Act (“FAA”) of 1925. Under the FAA, agreements to arbitrate are “valid, irrevocable, and enforceable” and courts will consistently enforce arbitral awards. The twentieth century saw a dramatic expansion of arbitration agreements in business-to-to-business contracts and—more controversially—in employment and consumer contracts. The U.S. Supreme Court’s decisions over the past two decades have almost invariably bolstered arbitration’s enforceability.
The article next examines the surprisingly long history of ODR. With the rise of the Internet, many companies experimented with ways of efficiently resolving inevitable consumer disputes. In 1998, eBay and PayPal launched mediation software that assisted buyers and sellers in reaching compromise. Modria, a popular spin-off of that platform, expanded into broader types of ODR, including binding arbitration where parties would submit their respective positions in writing and receive a written award from a neutral arbitrator. Since then, numerous ODR platforms have arisen, such as FairClaims, FORUM, and Arbitration Resolution Services. Under the FAA, awards rendered after online proceedings are no less binding than awards rendered after physical ones.
The institutionalization of ODR, Professor Schmitz notes, began long before the pandemic. Major ADR providers like the American Arbitration Association (“AAA”), the International Institute for Conflict Prevention & Resolution (“CPR”), and JAMS have ample experience conducting virtual hearings. These providers invested in “smart” conference rooms with all the audiovisual bells and whistles, internal protocols for hearings, and training for their arbitrators.
Then came COVID-19. State and federal court systems—laboring under thick bureaucracy, tight budgets, and limited technology—struggled to pivot their operations to virtual. Meanwhile, private ADR stood ready. Many parties moved their already-scheduled arbitrations online, and many who otherwise would have filed claims in court realized that online arbitration could provide faster adjudication. “As more arbitrations move online,” Professor Schmitz observes, “parties and arbitrators are learning firsthand what many of us in ODR have been saying for some time: [online arbitration] provide[s] efficiency, convenience, and room for innovation.” Online arbitrations can save time and cost for litigants, all while keeping everyone safe.
Not surprisingly, such rapid transformation is not without its challenges. There are obvious concerns about information security, for example. Professor Schmitz also considers a series of more novel questions raised by the explosion of online arbitration. A few examples:
- What happens if one party wants to move forward with online arbitration, but the other wants to wait for in-person hearings? Arbitrators derive their powers from parties’ contracts, but most arbitration agreements were written before the pandemic. Can an arbitrator force the reluctant party to arbitrate online?
- What about discovery from third-parties? Section 7 of the FAA empowers arbitrators to “summon in writing any person to attend before them” in a hearing to provide documents or testimony. Can arbitrators therefore order a third-party to attend a Zoom?
- Finally, what is lost in virtual hearings? Professor Schmitz is bullish on ODR, but she’s not naïve on its potential drawbacks. Can arbitrators assess witnesses’ credibility? Could witnesses be improperly “coached” off-camera during their testimony? Do parties lose meaningful opportunities for settlement discussions during lunch breaks, when lawyers might normally have informal conversations?
Some of these assorted issues received moderate scholarly attention before the pandemic, but now require more sustained analysis. Professor Schmitz herself is already hard at work. Indeed, this article is hardly her only recent contribution to our understanding of online arbitration. In the past two years—beyond a steady stream of publications—she’s conducted a breathtaking 100 video interviews with arbitrators, advocates, and scholars entitled “The Arbitration Conversation.” These conversations shed tremendous light onto the field’s virtual transformation. No scholar has better catalogued the pandemic’s effects on private dispute resolution. (Some people have been almost frighteningly productive these past couple years. Taylor Swift released four studio albums; Lin-Manuel Miranda produced four movies and composed the soundtracks of three more; and then we have Professor Schmitz.)
As the legal profession lurches towards an increasingly virtual future, online arbitration’s fate rests on ensuring that the process is efficient, fair, and reliable. This article shows that while ADR was hardly caught flat-footed by the pandemic, much work remains.