During the past few decades, arbitration has gained traction as an attractive alternative to court trials for resolving disputes. Major providers of alternative dispute resolution services have promulgated rules governing their proceedings which, when incorporated into contracts between disputants, are binding and enforceable. Arbitration is promoted as quicker and cheaper than traditional litigation (mostly because of tight constraints on the scope and duration of discovery) with more reliable results stemming from the use of arbitrators selected for their expertise in the subject matter in dispute. However, an arbitrator’s inability to sanction a party that fails to pay its share of the arbitration expense (either as a delaying tactic or simply because of lack of funds) can lead to delays or suspensions of the proceedings, which undermine the reliability of arbitration as an effective means of ADR.
Noticeably absent from the rules promulgated by the leaders in the industry are rules affording either the service provider (such as the American Arbitration Association, JAMS or the International Chamber of Commerce) or the appointed arbitrators the power to impose meaningful sanctions upon a party that fails to pay its share of the arbitration expense.
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