Who can be an arbitrator? Let’s find out!
I. The arbitration boom.
Arbitration is booming. The United States Department of Labor estimates that the demand for arbitrators will grow at twice the rate expected for other occupations between now and the end of the decade. Nor is the trend confined to the United States. The use of international commercial arbitration Has risen by over 3% per year between 2010 and 2019, with a spike of almost 10% in 2020. Arbitration is part of modern life. Up to 70% of consumer contracts are estimated to include arbitration provisions. The most recent survey of Fortune 1000 companies found that 83% used arbitration within the previous three years. It’s also an accepted part of consumers’ lives. Between 35% and 70% of consumer, contracts contain mandatory arbitration provisions, as do approximately 90% of international commercial contracts.
Congress, faced with colossal case disposition backlogs in the Federal courts, has responded by requiring court-connected mediation and arbitration as part of most litigated cases. This trend began with the Civil Justice Reform Act of 1990 and continued with the Alternative Dispute Resolution Act of 1998. Congress and the Federal courts have strongly supported the use and enforceability of alternative dispute resolution, particularly under the Federal Arbitration Act. But, unfortunately, courts have taken a hands-off approach, rarely stepping in to ensure fairness.
Even then, the validity of arbitration provisions is overwhelmingly upheld. Professor Jeffrey Stempel writes that the U.S. Supreme Court has a “crush” on arbitration, which he says is unlikely to change soon. State courts have likewise supported arbitration to pare down unmanageable caseloads. Moreover, states law often mirrors large parts of the Federal Arbitration Act, taking a similarly supportive view.
International treaties concerning arbitration mean that arbitration awards are often more easily enforceable abroad than judgments of a United States court. All of these factors contribute to the high demand for arbitrators.
Arbitrators make a good living. The median salary for an arbitrator is $63,000, which is 23% higher than the U.S. salary of about $51,000 per year. Of course, income will vary widely depending on education, experience, and other factors. Individuals at the top of the field earn $1 million a year or more.
II. Who can be an arbitrator?
Who can be an arbitrator? You might be surprised to learn that the answer is that anyone can be an arbitrator. An arbitrator is “an independent person or body officially appointed to settle a dispute.” According to the Oxford Languages Dictionary. An arbitration process is a form of alternative dispute resolution based on a contract between the parties agreeing to submit certain disputes to decision-making before a neutral person or persons. That arbitrator or panel follows the rules and procedures typically identified in the arbitration agreement.
The agreement may also preselect the arbitrator or organization presiding over the process. If not, those decisions are made by the parties or (if necessary) the courts. Unless the agreement specifies an arbitrator’s qualifications, they may agree on nearly anyone.
No special training is needed to be an arbitrator. There are no licensing or degree requirements. Two or more disputants are willing to contractually agree to submit a dispute to a specific person or group for resolution. An exception is a court-connected arbitration, which is usually open only to lawyers who have been in practice for several years and have substantial experience arbitrating.
Many people believe that an arbitrator must be a lawyer or former judge. This is untrue.
Referring to arbitration as “private judging” is a misnomer. It is private, neutral decision-making. The Department of Labor’s Bureau of Labor Statistics says the most common entry-level education is a bachelor’s degree, with experience in a related field such as insurance, real estate, finance, or construction.
It’s worth remembering that modern commercial arbitration had its foundations in the ancient guilds and trade fairs of the United Kingdom. The Royal Courts were not accustomed to dealing with trade-related issues. So they left commercial disputes to the tradespeople and their guilds, who resolved the dispute without discovery or motions, and with few limitations on the admissibility of evidence. The basis for the decision was the custom and practice in the trade, not legal rules.
In short, arbitration grew up alongside the law, not as part of it. While the state has eagerly adopted arbitration, it remains a private contractual arrangement.
That said, arbitration has become a popular alternative to litigation. It is confidential, faster, cheaper, less destructive to relationships, and less disruptive to business and daily life. Most arbitration concerns at least some legal issues as well as factual ones. Were there no such thing as arbitration, they would be resolved in court. And arbitration clients are frequently represented by lawyers, though they need not be. So, some knowledge of legal concepts is required.
III. The practicalities of being an arbitrator
A hundred or so years ago, arbitration avoided the severe economic dislocation of a labor stoppage. Instead of a protracted lockout or strike, parties to a collective bargaining agreement received a quick resolution from an arbitrator who knew what went on on the shop floor, so a business could resume. Arbitration was used for very little else. Now, of course, it is used for all kinds of things. This has opened up many opportunities, but it also means the field is crowded. Case cases are not assigned, with the rare exception of those working for a government agency, community organization, religious or trade group with staff, or volunteer arbitrators. The best an arbitrator can hope for is a referral from a satisfied client. Usually, they must create opportunities through active marketing and constant networking, interspersed with actual arbitrations that create a positive track record to which potential clients are drawn. So, while technically anyone may serve as an arbitrator, actually pursuing it as a career requires one to stand out from the crowd through a combination of training, experience, expertise, and consistent success combining to create a reputation that will convince all involved parties to agree to use them as an arbitrator.
IV. Training
Few disputants will select an arbitrator who doesn’t have some training in arbitration. However, it needs to be more realistic. To succeed as an arbitrator will require training.
There are several online opportunities available. Pepperdine University’s top-ranked Straus Institute for Dispute Resolution offers a Master of Laws (LL.M) in Dispute Resolution for lawyers and a Master’s in Dispute Resolution (MDR) for those with other backgrounds. American University offers an LL.M. in International Arbitration and Business for lawyers.
Washington College of Law offers sixteen-week online certificate programs in international arbitration and investment arbitration. Cornell University offers an online certificate in labor arbitration. In addition, a number of universities offer online and in-person master’s degrees and certificates in dispute resolution, which will include some training in arbitration. The more training you have, the greater your flexibility and credibility.
The Chartered Institute of Arbitrators (CIArb) is another important resource offering comprehensive training programs. CIArb offers four training “pathways” to arbitration diplomas, each consisting of theory, practice, and procedure classes. An award of a diploma requires a candidate to pass a rigorous test. Diplomas are available in domestic arbitration, international arbitration, construction arbitration, and maritime arbitrations.
Several popular hybrid ADR processes combine arbitration and mediation to maximize the opportunity for parties to control the outcome of the dispute while still guaranteeing a final resolution. To give yourself a chance for an appointment when the parties want to attempt settlement before an award is made, you should study mediation as part of your training, even if arbitration will be your focus. As for specific legal concepts, every arbitrator needs to be familiar with the law of arbitration, civil procedure, and evidence since these core concepts will come up repeatedly. Depending on your expected practice focus, such as family law or personal injury, other courses may also be critical to your success.
V. Practical experience
The best way to train in arbitration is to do it or watch someone do it. If you are in a law school setting, ask the person in charge of externships for help getting practical experience. There may also be a student arbitration team or an arbitration clinic. Pursue every opportunity for hands-on experience. You must build confidence that you know what you are doing.
Go to your nearest Neighborhood Justice Center, pro bono legal clinic, or similar organization and volunteer in exchange for any arbitration training and experience they can offer. They will probably use mediation much more often, and if you can get mediation training, take it.
If you have friends that are arbitrators, tell them how interested you ask if you can observe them in arbitration, and ask questions afterward. Volunteer to sign a confidentiality agreement. Stress that you’re only there to learn and promise not to discuss anything with anyone who wasn’t in the arbitration. If someone still objects, you’ll have to wait for the next chance.
Try to avoid getting an externship or a mentor first thing. You have to prove you are serious. Do some learning first, whether taking classes towards a degree, reading a lot, or following a CIArb pathway. Be able to contribute some insight if asked.
What if you don’t have any friends who are arbitrators? It’s time to make new friends. Whether it’s the local bar association’s ADR section meeting, the Society of Professionals in Dispute Resolution, an AAA seminar, or something else, you need to go where the arbitrators are if you want to learn from them. Let them know about your core expertise. Someone might need it. 365u
VI. Expertise
Your expertise, the word used here, is that part of your background that distinguishes you from other arbitrators. If you are a lawyer, it’s your years of experience handling certain types of transactions or litigated cases. If you are a CPA, an architect, an engineer, a physician, an athlete, or something else, it’s that part of your experience that clients use to differentiate you from others.
It will affect what kind of cases are referred to you and how you market yourself. You need to highlight your expertise to lawyers who generally select the arbitrator, those who share the knowledge and may be in dispute, and other ADR providers who can refer cases to you. Talk about how your expertise makes you a better arbitrator. Write about it. Speak about it. Put it in your marketing material. It’s your ticket to success.
Yes, anyone can be an arbitrator if they can get the parties to agree to appoint them. However, making a career of it requires much more.
Mark holds a Ph.D. in Leadership (Alliant's Marshall Goldsmith School of Management), an MBA in Finance (Pepperdine’s Graziadio School of Business), a Master's in Dispute Resolution (Straus Institute for Dispute Resolution, at Pepperdine Caruso School of Law) and a BSc in Urban Planning (Cal Poly Pomona).
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