PG updated a post he put up a few days ago with a short discussion of arbitration in contracts, including literary contracts.
He decided to expand it a bit and make it it’s own post because he thinks it may benefit authors in a variety of ways.
Arbitration is one form of Alternative Dispute Resolution (ADR) that is frequently used by businesses. It’s Alternative because it’s an alternative to locating an attorney to file a lawsuit in one of the many the civil courts which, at least in parts of the US, are massively backlogged. It’s not quite Jarndyce and Jarndyce, but in many places, we’re talking about a years-long process.
ADR has flourished in the last 30-40 years because commercial businesses have wanted to get disputes resolved promptly so they can move forward with the real business of the company.
To avoid this backlog in the United States (and a number of other Western nations), a competently-drafted arbitration clause will govern the resolution of any disputes between the parties. Arbitration sidesteps the courts entirely and uses a far more efficient alternative. Arbitration is generally a better way and virtually always a much faster way of resolving business disputes than the civil court system.
For one thing, most judges have never had dealings with publishing disputes (or disputes in other specialized commercial businesses). Depending upon the jurisdiction, a trial judge may try a criminal case involving a theft from a convenience store one day, a contested divorce the next day and a dispute between two adjacent landowners about where the property line should be on the third day.
Many trial judges, particularly those who decide commercial disputes, are generalists. Most have never tried a case involving an author and a publisher or a group of authors.
Arbitration allows the parties in a publishing dispute to have an experienced literary attorney to act as an arbiter (for a fee) and they won’t have to educate the arbiter about publishing law.
You can find knowledgeable arbitrators in a variety of different ways. The American Arbitration Association is designated to choose an arbitrator and set the arbitration rules in the large majority of business contracts PG has viewed that include arbitration provisions.
The AAA website even provides a variety of arbitration clauses you can cut and paste into your contract. Here’s an example:
Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial [or other] Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
While US civil and criminal courts are typically open to the public (you can go watch a divorce trial or a criminal trial on virtually any weekday in any large or medium-sized American city), arbitration is typically private. You can specify confidential arbitration in your arbitration clause if you like, but the arbiter isn’t required to announce the time and place of arbitration to anyone but the parties and their attorneys.
While he was practicing, PG never attended an arbitration that wasn’t set in a law firm’s conference room. Typically, a supply of water bottles was provided for any who desired one. An arbitrator will have read all the written materials provided by the parties beforehand (judges sometimes don’t have the time to do so) and often has asked the parties in advance to agree upon facts that are not in dispute.
While the arbitrator is there to resolve disputes, an arbitrator has an ability to get to the bottom of the core disputes by using any reasonable shortcut. “Ms. Jones, does your client agree that the other driver entered the intersection before she did?” is an example.
Another might be, “Is there any dispute or question that the royalty reports are accurate information about how many books the publisher shipped during the period of time we’re talking about? That we’re only looking at a dispute about how many books were returned during that period and whether the publisher accurately reported and charged back those returns on the royalty statements or whether the publisher charged back a number of books in excess of the number returned or failed to report the later sales of some or all of those returned books?”
A typical trial judge would likely not know how some publishers mishandle accounting of books returned.
If two or more attorneys are charging by the hour for the parties involved, in addition to getting a dispute resolved quickly, the parties might be paying less for legal counsel via arbitration rather than educating a trial judge about the details of the traditional publishing business.