Forced Remote Arbitration

Source: David Horton, Cornell Law Review, Vol. 108, 2022

From the abstract:
Courts responded to COVID-19 by going remote. In early 2020, as lockdown orders swept through the country, virtual hearings—which once were rare—became common. This shift generated fierce debate about how video trials differ from in-person proceedings. Now, though, most courts have reopened, and the future of remote trials is unclear.

However, the pandemic also prompted a sea change in alternative dispute resolution. Arbitration providers pivoted away from in-person adjudication and heard cases online. Yet unlike virtual trials, which coexist uneasily with norms in the court system, remote hearings fit snugly within arbitration’s tradition of procedural and evidentiary informality. Thus, while virtual trials may prove to be temporary, virtual arbitration is gaining steam. Online-only arbitration startups have emerged, established providers are marketing their virtual options, and firms are mandating that plaintiffs resolve disputes without setting foot in the same room as the decision-maker. This trend threatens to make the controversial topic of forced arbitration even more fraught. Nevertheless, we do not know how remote procedures impact win rates, case length, and arbitration fees.

This Article shines light on these issues by conducting an empirical study of forced remote arbitration. It analyzes 70,150 recent filings and reaches three main conclusions. First, since July 2020, roughly 67% of all evidentiary hearings have been held virtually. Even though this figure will likely decline as the pandemic re-cedes, online arbitration has become entrenched. Second, plaintiffs who participate in virtual proceedings generally win less often and recover lower damage awards than individuals who arbitrate in person. This “remote penalty” exists in some set-tings even after controlling for variables such as claim type, pro se status, and the experience of the defendant, the lawyers, and the arbitrators. Third, even though proponents of forced remote arbitration contend that it streamlines cases, the data only partially support this claim. Some remote modes, such as documents-only proceedings, seem to save time and money, while others, like video hearings, do not. Finally, the Article explains how its findings can help lawmakers and judges regulate and monitor forced remote arbitration.