Is it just about the parties? A social welfare approach to familiar problems of international arbitration

Abstract Many doctrinal discussions of arbitration, such as the law applicable to arbitration agreement, joinder of third parties, and arbitrability, are based on formalist methodology that derives answers from categorical notions such as party autonomy. This paper attempts to take a different route and addresses arbitration from the viewpoint of social welfare, using economic methodology. The paper highlights that arbitration, due to its procedural features and private-regarding incentives of arbitrators, comes with a cost to society. Even though that cost is outweighed by its benefits, this fact can inform our thinking about arbitration and inspire novel legal solutions to familiar problems.