Category Archives: Arbitration

Banks vs. Consumers (Guess Who Wins)

Source: Robert Berner and Brian Grow, Business Week, June 5, 2008

The business of resolving credit-card disputes is booming. But critics say the dominant firm favors creditors that are trying to collect from unsophisticated debtors.

What if a judge solicited cases from big corporations by offering them a business-friendly venue in which to pursue consumers who are behind on their bills? What if the judge tried to make this pitch more appealing by teaming up with the corporations’ outside lawyers? And what if the same corporations helped pay the judge’s salary?

It would, of course, amount to a conflict of interest and cast doubt on the fairness of proceedings before the judge.

Yet that’s essentially how one of the country’s largest private arbitration firms operates. The National Arbitration Forum (NAF), a for-profit company based in Minneapolis, specializes in resolving claims by banks, credit-card companies, and major retailers that contend consumers owe them money. Often without knowing it, individuals agree in the fine print of their credit-card applications to arbitrate any disputes over bills rather than have the cases go to court. What consumers also don’t know is that NAF, which dominates credit-card arbitration, operates a system in which it is exceedingly difficult for individuals to prevail.

Alternative Approaches to Interest Arbitration: Lessons from New York City

Source: David B. Lipsky and Harry C. Katz, Public Personnel Management, Winter 2006, Volume 35, no. 4

Scholars have not taken adequate account of variation in the interest arbitration process in their research on the effects of interest arbitration on bargaining outcomes. There are two fundamental approaches to interest arbitration, which they term the “judicial prototype” and the “negotiation prototype.” The recent cases involving the Patrolmen’s Benevolent Association (PBA) of New York City and the city of New York illustrate the differences in these two approaches. There is a relationship between the arbitration prototype and the bargaining power of the parties. A party with greater bargaining power should prefer the negotiation prototype in interest arbitration. The New York City police cases—especially the effects of the attack on the World Trade Center on September 11, 2001—are analyzed to determine whether changes in the parties’ bargaining power affected their approach to interest arbitration.

Resolving Workplace Conflict: The Alternative Dispute Resolution Revolution and Some Lessons We Have Learned

Source: David B. Lipsky, Perspectives on Work, Summer 2006, Volume 10, no. 2

The U.S. industrial relations system has undergone a historic transformation over the past three decades. One of the most significant features of that transformation has been the dramatic rise of alternative dispute resolution (ADR) as a means of addressing workplace conflict. ADR can be defined as the use of arbitration, mediation, and other third-party techniques instead of litigation to resolve workplace disputes. In the view of some experts, the rapid diffusion of ADR in employment relations, especially in the non-union sector, has represented nothing less than a revolution in dispute resolution. The ADR revolution has spread to so many other types of disputes, including family, consumer, construction, and financial disputes. In many ways, transferring the resolution of workplace disputes from public to private forums constitutes the de facto privatization of the American system of justice.