Living in society, in itself, consists of a high degree of the possibility of getting involved in conflicts.
Thus, when an impasse arises regarding tradable rights, the parties will look for alternatives that are more advantageous to them. With this in mind, based on the assumption that resources in society are scarce and individual preferences potentially unlimited, the parties must rationally analyze their choices in order to maximize their benefits and minimize their losses.
In this scenario, there are two possible paths: in the first, the dispute will be submitted to the Judiciary, so that the State-judge can exercise its jurisdictional power; and in the second, when expressly agreed by the parties, an institution will be used so that an individual (arbitrator) can resolve the conflict, provided that all the legal requirements are met. Precisely in this respect, the Economic Analysis of Law (a theory which, using an interdisciplinary method, applies concepts from economic science, especially microeconomics, to various areas of law, in order to understand the dynamics of human acts in the face of the legal system) can help to identify how efficient (or not) arbitration can be.
Some factors specific to the arbitration procedure tend to increase transaction costs (costs necessary to carry out economic transactions), making it less attractive: (i) the lack of a specific remedy for challenging an arbitration award that is vitiated by an error in judicature (as it is issued by a human being (arbitrator), it does not have the character of infallibility and, as it is unappealable, the decision may prove to be flawed and irreparable); (ii) the lack of objective criteria for assessing the arbitrator's expertise (Law 9. 307/96, art. 13); (iii) the possible mitigation of the "pure price" for the impartiality of some professionals.307/96, art. 13); (iii) possible mitigation of the impartiality of arbitrators, due to a possible "market reserve" on the part of some professionals; and (iv) a high "pure price" for entry into arbitration proceedings. On the other hand, other aspects can reduce transaction costs and make arbitration more attractive for resolving disputes: (i) guarantee of confidentiality (which is not the case with art. 155 of the CPC); (ii) possible specialty of the arbitrators; (iii) possibility of "neutrality of the arbitral forum" in international disputes; and (iv) effective speed of the arbitration procedure.
It can be seen, therefore, that arbitration brings benefits and losses for the parties, and its attractiveness can change according to the peculiarities of the conflict. Individuals should therefore consider the factors explained above, with a view to maximizing their utility and not generating waste, thus acting in the most efficient way possible.
