The ‘It’ Arbitrator: Why Do Corporations Not Act as Arbitrators?

Abstract

Abstract The international arbitrators’ service market is diverse, with arbitrators operating out of different structures, varying from multinational law firms to small arbitral boutiques. Yet, despite this heterogeneity, this market is dominated by individuals in the sense that legal persons are rarely, if ever, selected to act as arbitrators directly. Albeit the idea that an arbitrator must be a natural person appears to be deeply ingrained in the dominant understandings of arbitration, this is, in fact, an exception to the way knowledge-intensive services are usually provided. This brings to the forefront a largely unexplored topic: why legal entities are not selected as arbitrators. Through a survey of 60 jurisdictions, we explore to what extent may legal persons be appointed to act as arbitrators and conclude that stand-alone legal reasons do not fully explicate this state of affairs. Against this background, we advance a further set of explanations for relating to conflict of interest rules, insulation from civil liability, as well as the peculiar price formation and power competition dynamics within the arbitration market. Culturally and socially shaped expectations on how arbitrations should be managed play a role too.