Response to Christopher R. Drahozal & Erin O’Hara O’Connor, Unbundling Procedure: Carve-Outs from Arbitration Clauses
In Unbundling Procedure: Carve-Outs from Arbitration Clauses, Christopher R. Drahozal and Erin O’Hara O’Connor offer a wealth of information about how sophisticated parties allocate the costs and risks of various forms of dispute resolution. What they discover is that these parties, in a variety of contexts, make choices between arbitration and litigation based on the claims and remedies that are likely to be involved. In other words, the parties “carve out” from a general arbitration clause matters that will be litigated. For example, it appears the parties are more inclined to select the judicial process when property, as opposed to liability, rules are at stake. While the descriptive element of their effort is interesting, it is not clear what implications, if any, follow from that information. Or, it may be that they have gone a bit far in suggesting that courts should mimic the services available in private markets.