Stiffing the Arbitrators: The Problem of Nonpayment in Commercial Arbitration

By Neal M. Eiseman & Brian Farkas*

There is a hole in our arbitral system. Despite being among the most efficient and prevalent means of resolving commercial disputes, and one generally favored by courts,^[1] arbitration is dangerously susceptible to the problem of nonpayment. Simply put, a respondent seeking to avoid liability may be able to “game” the system by refusing to pay its share of arbitration fees. All too frequently, this leaves the claimant without an effective remedy to hold the nonpaying respondent accountable. Read more here.

[1] See, e.g., AT&T Mobility LLC v. Concepcion, 563 U.S. 321, 329 (2011) (noting that arbitration is an “efficient, streamlined procedure tailored to the type of dispute”); see infra, Section IV, discussing the federal and state public policy clearly favoring arbitration.

*The authors are practicing attorneys at Goetz Fitzpatrick LLP.