More Efficient Arbitration Clauses?


Over the past several decades the use of arbitration has become increasingly widespread. This has largely been due to its perception as a more efficient means of resolving disputes, delivering speedier results at a lower cost. In recent years however, these supposed advantages of arbitration have come under increased scrutiny in academic and professional debate regarding US and international arbitration. This paper analyzes the state of arbitration in Israel through the prism of this debate and identifies several possible inherent systemic failings that could explain its inefficiency. The key conclusion of this analysis suggests that in the ex-post stage (i.e. after a given conflict has arisen) all actors have conflicts of interest that grossly hinder the chances for efficient proceedings. This paper examines whether potential litigants can solve or mitigate these issues through better, tailor-made arbitration clauses. This paper further examines the fundamental problems that prevent such future issues from being resolved in the ex-ante stage. This paper proposes an innovative and creative approach to finding possible solutions, such as a hybrid mechanism that combines ex-ante and ex-post arrangements. Further research into a mechanism of this sort is needed. This paper approaches the debate from a new angle and may contribute to a better understanding of arbitration inefficiencies in the Israeli system and can hopefully contribute to the ongoing international debate regarding arbitration efficiency.