American Arbitration:

Its History, Functions and Achievements


By Frances Kellor

First Vice-President of the American Arbitration Association (AAA)


Harper and Brothers Publishers

New York




Dedicated to

Lucius R. Eastman and Felix M. Warburg

Founders of the AAA


Spruille Braden and Thomas J. Watson

Founders of the Inter-American Commercial Arbitration Commission (IACAC)




Page xi

“On Rockefeller Plaza, overlooking a scene made gay by skaters and solemn by the flags of all nations, where a fountain plays in summer and Christmas trees are lighted and carols are sung in winter, there functions and institution unique in the history of keeping peace and goodwill among men.

                  “It is the first of its kind in civilization.  It is the headquarters of national and international systems of arbitration, set high among the thousands of organizations and the leaders that constitute the commercial interests in Rockefeller Center. It is peculiarly American in that, in a busy center where competition thrives and ideas flow like magic, there should be an institution that brings tranquility and happiness out of the chaos which disputes make in  the lives of men and nations.”


Xii – the 15,000 men who work here are “commercial and industrial peace officers of the nation, and in other countries of the Western Hemisphere.”


The Preface ends with a quote from Kipling’s “L’Envoi


‘And only the Master shall praise us, and only the Master shall blame;

And no one shall work for money, and no one shall work for fame;

But each for the joy of the working, and each, in his separate star

Shall draw the Thing as he sees It for the God of Things as They Are!”


Frances Kellor, New York, January, 1948.








Page 3


Paris was an arbitrator for Juno, Athene and Venus.  They existed in Marco Polo’s time.


4 – One of the first disputes submitted to the earliest known American arbitration tribunal was in 1786 by the Chamber of Commerce of New York, involving the wages of seamen.


Despite attempts to put it in a straight jacked, arbitration remains voluntary.  “This national right of self-regulation I a precious possession of a democratic society, for it embodies the principles of independence, self-reliance, equality, integrity, and responsibility, all of which are of inestimable value to any community.”


5 – Modern institutions have made arbitration quasi-judicial and put conciliation and mediation in their proper perspective as bargaining processes without legal enforcement.


“As disputants became more involved in litigation, they neglected to exercise their own powers of self-regulation.  Due to the absence of any contemporaneously organized arbitration machinery or established rules of procedure, it became far easier for parties in dispute to litigate than arbitrate.”


6 – America was a rich country, full of adventures early one, it could afford a considerable volume of disputes at high costs of settlement.  Not now. 


7 – Chambers of commerce had arbitration vents in 1768 in NYC and 1794 in New Haven, and 1801 in Philadelphia.  But, these examples did not result in a general acceptance by other chambers of commerce.


8 – The early pattern (for which we have scant records) is of lots of litigation without care for costs, with little organization. People didn’t know that arbitration could help in “the advancement of goodwill, good faith, confidence, and cooperation.”  “They were also unaware of the latent power of arbitration for advancing international peace and security through world trade.”




Page 9


The conferences of 1899 and 1907 established the Permanent Court of Arbitration at The Hague. 


It was hoped that these institutions and procedures might stop future wars. But, they forgot to cultivate the spirit of arbitration.   So the first world war came and went without hearing about Arbitration.


10 - The League of Nations also failed to cultivate the spirit of arbitration or to teach nations or people to use it. So the second world war came and went without using it.


This patter began to change with the inauspicious 1920 enacting of a modern arbitration law in 1920.


11 – This made arbitration agreements enforceable.  It also closed the courts to people until they completed their arbitration agreements.


This led to the creation of the first permanent arbitration institution ever: The Arbitration Society of America (1922).  It took a scientific approach to arbitration.


12 – This got headlines and was used.


“Nowhere in the world had arbitration ever had such an audience as when sixty members of the Judiciary” met to honor it, at Astor’s home, February 28th, 1923.


They launched “Arbitration News” and the slogan ‘Learn to Arbitrate’! They had a conference in May of 1923.   They distributed 158,000 pieces of literature in a year and a half. 


13 – They got 600 requests for information and when existing (1922 – 26) they created modern arbitration laws in Mass and New Jersey.


Will Hays (of the Hays code?) was a director of the society.  He got arbitration in the film industry.


14 – Moses H. Grossman was a leader.




Page 15


In 1925 the Society was challenged by the Chamber of Commerce. They created the Arbitration Committee of the Chamber, headed by Charles L. Bernheimer.  They were more conservative and bent on changing laws and provide facilities and funds.  The Society was more into bringing arbitration to the people.


16 - The Society relied on membership.  The Foundation on an insurance policy on Bernheimer.  The society was lawyers. The Foundation, business interests.


In 1925, they formed a committee to resolve their differences.  On January 29th, 1926 the AAA was created and the two prior organizations folded.    Honorary President suggestions by the Foundation: Charles Evans Hughes: the society Herbert Hoover. 


18 – The Society didn’t have structure and the Foundation was NY.  So the AAA started a truly national organization.  It got 520 Industrial vice chairmen.   Lawyers and Bankers also contributed. CPAs too.  All gave it prestige.


Antonia Hatvany served faithfully through the early years of the Association. She is the only female of four males mentioned.


But there were too many contributors to mention.  Dozens are listed in the index.




Page 22


Now the AAA was “ready to construct a national system for economic peace and security in domestic affairs and to use this system for international peace and security.”  To embody “impartial and swift justice”


But first they had to build a “national system of tribunals, for the greater development of individual responsibility in the settlement of disputes and for the encouragement of self-reliance.”


But they didn’t realize how much work this would take.


23 – The idea of a national system was a departure.  It required an “institution of arbitration that would be free from alliances with any other organization.”  It provided “Tribunals, facilities and services which parties could use at their discretion and of their own free will.”


24 - Rather than wait for disputes, in a Laissez Faire way, they advocated “anticipating and priding in advance for the settlement of future disputes.”

Rather than be judged by the number of disputes resolved, the AAA looks at the number avoided.


The system was to be uniform, accessible to the people and simple and attractive.


25 – The AAA was a voluntary organization, without official funds. 


It set up qualifications for volunteers and ways to rate their performance.


26 – Arbitration is based on justice, not compromise. “Panel members were instructed to act as arbitrators and not as mediators or conciliators, under Rules that made no provision for any proceedings not of a quasi-judicial character.”


27 – As facilities became available, the AAA pushed to have arbitration clauses put into contracts prior to disputes.   The assurance that an arbitration could be held with speed, economy and justice, encouraged this.


The American concept of arbitration was unique in having a system of tribunals, that carried on research and experimentation.




Page 29


29 - “Americans have the distinction of having organized the first national arbitration institution.  By this is meant they were the first to separate the practice of arbitration from other economic or social institutions.”


31 – The AAA “functions from its central headquarters through thirty branch offices staffed by clerks, and when necessary, by a secretary. From these branch offices, arbitrations are administered, literature is distributed, and arbitration is cultivated within that area by means of co-operating commercial and trade organizations or through individuals or social agencies.”


“Its members are commercial peace officers of the nation.  They are busy men engaged in regular pursuits who, upon request of the parties, lay aside their regular duties and act as judges to settle the matter in dispute.”    Another panel is the National Labor Panel that hears disputes between management and labor.


The Motion Picture Panel is 1,200.  The Air Transport Panel is 150, the Fur Industry is 100 members.


32 – Tribunals and admin are split on the “theory that an arbitration is the private affair of the parties, and that the Tribunal set up for their convenience is their Tribunal.”


The decisions of an arbitrator are not subject to the control of the association other than through the rules and procedures. 


Executive functions are done by the Association; the judicial functions of Tribunals are performed by members of Panels under Rules of Procedure.


The panel is chosen by the parties involved.  The association only intervenes when a party fails to appoint an arbitrator.




Page 34

Previously trade, commercial or financial organizations organized arbitration.  So they funded it.  If the CofC did it an administrative fee was charged.  The organization absorbed the costs.


This meant it was a one-off.


The Panel must be kept up.  Rules promulgated, studies done for this purpose:


36 – The minimum needed is the keeping central headquarters, staff for Tribunals, r and d; the selection of Panels; the facilities for arbitrations; the promulgation of rules; records; a repository of court decisions; publications.


If a contract clause points to the AAA they better be able to deliver and quickly: with a room, a clerk an arbitrator, and services.


37 – In half the submitted conflicts the parties withdraw and so part of the admin fees must be returned.


It also isn’t fair if parties who are poor must pay.  Arbitration should be available to all regardless of ability to pay.


38 – The costs should be social.  Because, one small dispute in labor can precipitate strikes across the nation.


When arbitration allows folks to settle their disputes, arbitration has done a true service. 


Arbitration is not just for the parties in dispute.  It works to avoid disputes.  To influence the cultural and social life of a nation in the direction of co-operation, and to promote confidence and goodwill among its people; and to advance unity and understanding through the reduction of conflict. Arbitration is organized to protect society generally (39) from the risks and hazards of unnecessary disputes and to reduce their cost and waste to civilization.  One of its functions in a democratic society is to encourage self-regulation and self-discipline within a framework of individual initiative and private enterprises.”


39 – Arbitration is hampered from getting funds because it cannot advertise its settlements.  The results are private and only between the disputants.


40 – Membership gives steady income and it is a democratic form of financing.  It is over 25% of the budget for 1947. 


Admin fees are not totally reliable.  But they are 40% of the budget for 1947. 


41 – The AAA prefers smaller contributions from many to avoid the appearance of buying influence.


42 – The Soviet government funds arbitration.   An international fund would be ideal.




Page 44


44 – In 1927 The AAA looked into the history, status, and progress of commercial arbitration.   It was published as “Year book on Commercial Arbitration in the United States,” published for the AAA by the Oxford University Press in 1927. 


This hadn’t been done since Morse did a version in 1872. 


These were undertaken to bring arbitration in line with existing law.


46 - To promulgate rules, they created the a monthly bulletin called the “American Arbitration Service.”  (so Kellor!)  Later they created the Arbitration Journal with court decisions about arbitration are shared.


They also prepared draft acts for legislators. 


47 – The Arbitration Law Committee helped create this law.


With the passing of the New York State Arbitration Law of 1920 and the United States Arbitration Law of 1925 foreign trade arbitrations were attracted in increasing number and variety to the US.


48 – They also translated and published work on international laws.


49 – The descriptions of the Journal remind one of the Americanization journals.  “By opening the archives of history, the general knowledge of the centuries becomes common knowledge” Eastman wrote.

50 – The Arbitration Journal was suspended during the War and started again after as the International Arbitration Journal.

They have also sponsored several lectures.




Page 52


The early New York arbitrations were done by 6 gentlemen who met every Tuesday or oftener to adjust differences.  They had no idea what this would lead to.


In footnote:  For a detailed history see “Report of the Special Committee on Commercial Arbitration, Chamber of Commerce of the State of New York, Feb. 2, 1911.  Also Annual Report of the Committee on Arbitration, May 6, 1943.  Also, Arbitration Records of the Chamber of Commerce of the State of New York, 1779 – 1792 in the NY Public library.  AND, “The Earliest American Tribunal,” By Charles T. Gwynne, in The Arbitration Journal, Vol 1, 1937, page 117.


53 – In 1926, arbitration was either going to be just for trade groups or “free to serve mankind whenever and wherever it was needed.”


It could work on a few cases a year for their special benefit.  Or it could “begin the construction of a science that might one day help to bring peace and tranquility within the nation and security against war.”


It decided to become a laboratory for the study of arbitration.


The idea that arbitration could be a science was based on the assumptions that:

“First, that men and nations preferred amicable ways of settling their disputes, and that there was latent a high degree of confidence, good faith, goodwill and co-operation that could be released by  methodical organization, to facilitate this power of self-regulation.”  Second the promise of such settlements would be a basis for such a science. Third this would lead to control over disputes.  Fourth: This would be corrective and preventative, lessening future conflicts.


“The subject matter of a science of arbitration is human conflict.  This results in differences or disputes that threaten the peace, security, and happiness of those immediately concerned, and of the community of which they are a part, or of communities or states in relation to each other.”

“The purpose of a science of arbitration is to devise and apply in a systematic way measures of prevention, control, and settlement so differences and disputes will not affect adversely or disastrously the welfare of individuals and communities or their amicable relations to one another.”

                  “The elements of such a science have now been fairly well established.”


55 – Still, rather than just laws, this requires ongoing research and experiments, that will result in the machinery for practice.


This is not just uniformity in laws.


56 – “It is within its province constantly to study the different types of controversy and the different forms of contract in order to reduce conflict in human relations. . . .It is within its province to increase the degree of acceptance of arbitration by convincing parties and the public of its benefits to mankind.” 


57 – “As originally conceived, arbitration was a friendly service rendered by a disinterested person, without compensation, upon the invitation of parties in dispute.  As used in the modern complex economic world, it has had to acquire machinery, procedures, and procedural laws and rules to be serviceable to the larger needs of society.”


58 – In Britain there was an arbitration law and machinery.  In the US, lots of state laws and no machinery. 


59 – In 1947 they created the Research Institute for the Advancement of the Science of Arbitration.  


60 - Seeing arbitration as a science is important as “it possesses great potential power for the avoidance of war. International relations since World War II have clearly indicated that procedural disputes can delay peace settlements to the point of engendering war, or threats of war, and that the absence of organized procedures and machinery prolongs these disputes.”


A Research Institute for the Advancement of a Science of Arbitration would give orderly direction to such a science. It would arouse public opinion on its behalf, and this would further offer a challenge to scientific minds working towards international peace. LIKE the Service.






Page 63


Although arbitration has been in use for many centuries, resort to it had been occasional rather than regular, except in certain commodity exchanges.  No general practice had been developed as a part of a national policy.”


Permanent accessible facilities are key to the change.


65 – “Rules avoid frustration of arbitration through delays or attempted evasions by providing time limitations and by prescribing the steps to be taken under default by either arbitrators or parties.”


Less than 6% of awards have been attacked in court and less than 1% have been sustained.


66 – “Rules protect the public from unsettled disputes.  This is particularly true of labor disputes where reference to arbitration is often overshadowed by the threat of a strike. By avoiding delays and expediting settlements, Rules facilitate settlements of disputes that might otherwise end in public disaster.”


All rules and rule changes must, ultimately, be agreed to by all parties.


There are general practices and special practices, which are particular to an industry (though based on the general practices).


Lawyers teach arbitration and interpret it as judges.


69 – “A general practice of arbitration is also characterized by an ethical content or standards which generally obtain in all arbitration.  These pertain to parties, arbitrators, and administrators.”


70 – “Examples of ethical standards that pertain to parties are the following: They are expected to lay aside the tactics of litigation in an arbitration tribunal; and to treat each other with the courtesy that becomes an amicable proceeding.”


There are reasons for an arbitrator to drop a case. One is if they appear to have a bias.  “The Arbitrator should not express opinions or views concerning the parties or the controversy before or after the award is made.”


71 – The arbitrator must remember “Arbitration is not a litigation and he should keep it free from technicalities or legal formalities and the spirit of litigation.  Upon him devolves the responsibility for keeping the arbitration free from animosity, recriminations, and the conduct tending to impair the goodwill of the proceeding.”


“The award should be made in clear and simple language, technical expressions of law avoided.”


72 – “They [administrators] may not become members of other organizations if such association might indicate a line of interest that might create a question as to their disinterestedness.”


Beyond machinery, “It [arbitration] involves the larger aspects of the study of controversy, so the general practice may be extended to new areas of conflict.”





Page 74


The opening of this chapter is very procedural.


76 – The parties are assigned the responsibility of 1) determining the matter they will submit to arbitration; 2) fulfilling their claim in the manner provided in the Rules . . . up to 28 responsibilities listed.


80 – The services of the clerk are listed.  These include keeping records and going to hearings.  There are 13 regular ones and 6 contingent ones.


Administrative roles are listed.


82 – “Because many details are taken care of, parties find commercial arbitration easy and satisfactory, expeditious and inexpensive, and the public is less and less plagued by unsettled controversies.”




Page 83


Since 1926 the AAA settled labor type disputes for the Actor’s Equity Association and time-to-time did other labor disputes.  But, with the 1933 National Industrial Recovery Act labor arbitration requests became much more frequent.


They knew these were social and economic problems of far wider scope than in commercial arbitration.  It is less concerned with questions of contracts than with issues arising out of complex and sensitive human relations.


84 - One person might be dismissed, and this could lead to a strike industry wide. “Non-settlement, or delayed settlement or the failure to obtain a friendly settlement, might precipitate a work stoppage.”


The 1937 Voluntary Labor Arbitration Tribunal made the system quasi-judicial, thereby excluding the administration of arbitration or conciliation proceedings.


In mediation, the third party actively participates in negotiation.  Arbitration is judicial. The judge’s decision is final.


An arbitrator cannot be a conciliator at one stage and then a mediator and then a judge.  Orderly proceeding for the presentation of evidence, calling of witnesses, and receipt of exhibits pertains only to arbitration.


85 – If a threat of strike looms, a mediator must avoid that disaster with a compromise.  There are no rules.


The AAA thought that when mediation fails you go to arbitration.  But justice, not compromise is the goal.


86 – The AAA found that compromise settle issues partially, arbitration fully disposes of them.


Compromise philosophy also bred frustration with arbitration because it seemed that evidence was presented to no end.  Lawyers didn’t like this.


Being a leader in your field was not the best qualification for such panels. New selection criterion were needed. 


Mediation between labor and management had long been informal.  Arbitration is not so informal.


87 – Labor dispute fees are lower.  But, using an arbitrator remains voluntary.


88 – The AAA has been asked to publish awards.  It refuses.


The fees are lower, but agreed upon prior to starting.


The AAA has “disposed of many hundreds of labor disputes; it has greatly increased the acceptance of its standard labor arbitration clauses in collective  (90) bargaining agreements.”


90 – Sometimes the AAA recommends members of its panels to be permanent arbitrators in an industry.


91 – “The Association, through these various activities, has made the settlement of labor disputes a part of the new American pattern”: 1) by providing a national tribunal that operates in the same manner in all disputes; 2) by separating the bargaining and judicial processes; 3) by having a different sort of labor panel staff; 4) by keeping the democratic process that reserves both parties rights; 5) by regulating costs; 6) by the use of Rules that make for an orderly proceeding.


Combining labor and commercial under one roof has many advantages. Experience in one arena can inform that of another. It allows corps to just use one place and so is efficient. It makes arbitrators more flexible and experienced.  It makes their educational materials available to all.  “The combination makes possible the inauguration of an American pattern, such as exists in no other country.  Arbitration thus moves forward steadily and constructively to public advantage in all areas of disputes.”




Page 92

In 1940, there occurred one of the events that made arbitration history and that also diversified the American pattern of arbitration.


In 1923 they provided arbitration between exhibitors and distributors of films.


For efficiency, the distributors made a standard contract all exhibitors had to accept.   In 1930 the Supremes said this violated the anti-trust law.   Five distributors said they’d voluntarily correct some practices, so the court gave them 3 years.


This was different arbitration as it was decreed.  The exhibitors who were not part of the suit, were arbitrators.


Panels were created across the nation for this.  The AAA was named the admistrator of the system.


95 – It made 31 offices for this, selected and trained personnel and appointed a panel of 1,000 men.


The procedures followed and the time limits are listed for pages in 19 provisions.  Even the procedures for appeal are listed.


98 – The resulting Motion Picture Arbitration System has become quasi-permanent.


99 – “It conforms to the American pattern n the principles and policies set forth in the Association’s Commercial Arbitration Rules.”


It shows that government and business can co-operate in maintaining good relations among the component parts of an industry.  The presence of the machinery and the will to arbitrate have “actually led to a low rate of arbitration as against the thousands that were expected.”




Page 100


Starting in 1917, accident claims could be sent to arbitration in NYC.    But this did not take hold.  Lawyers did not like it and people didn’t comply and justices didn’t care about getting rid of backlog. 


101 – In 1927 the AAA called a conference on this. General motors’ head helped set this up.  The claimant paid nothing.  

102 – They did this partially because “persons injured, often through no fault of their own, and unable to obtain just and prompt compensation or a hearing of their grievance, are predisposed to become detractors of the American form of government and critical of the courts.  Under such circumstances, they may become centers of disaffection from which proceed ill will and attacks upon American institutions.  It seemed, therefore, that in the interests of public welfare, the prompt disposal of accident claims was desirable.”


103  - Whether or not the Accident Claims Tribunal goes national will have to wait.  During the war driving went down.  Now it’s coming back up.   But the ACT has shown that arbitration can be applied to the relief of injured persons and settlements of property claims.




Page 104


Only the AAA and America have a National Panel that represents all industry.  These are permanent members.  Availability and expertise are important.


104 - You also need, “expertness in the field of controversy, impartiality, freedom from bias, absence of fraud and corruption, and right conduct in office.”


105 – High standing in the community inspires confidence; he needs a judicial temperament – patient enough to probe facts; “he must have been disciplined in human and public affairs; otherwise he would not show the tolerance and understanding necessary to the evaluation of the human elements in a dispute. (6) He must have sufficient leisure and financial income from his own calling to enable him to act upon an honorary basis in the rendering of a public service; and he must consider his office as one of public significance and responsibility. (7) He should be identified with some public activity and take an interest in public affairs.”


People who want to be arbitrators must fill in an application and pass a test of selection by the parties involved. 


106 - They must “disclose any circumstances or facts which he believes might create a presumption of bias toward either party or toward the subject matter.”


107 – There are 9 stringent techniques for checking qualification and performance of Panel arbitrators.


108 – “Panel arbitrators also occupy a distinguished position of leadership in their own community.  They have become leaders in arbitration.”


109 – “They advance good business and labor relations by being always ready to assist in the settlement of disputes.”




Page 110


The administrators do not do tribunals.  The Tribunals are strictly done by the parties involved. The AAA offers rules and procedures.


111 – “In the application of these Rules, the impartiality of the administrator should be no less than that required of a Panel arbitrator.  The administrator is thereto carry out the will and the intention of the parties, to show favor to neither party, to perform no service.”


Odd requests challenge this impartiality.  Therefore all parties must always be fully informed.


112 – In the tribunals department, the potential arbitrator is trained.  He administrator has a labor arbitrations staff, a commercial arbitration staff, an accident claims tribunal staff, and international arbitrations staff and a motion picture arbitration staff to back him up.


The tribunal arbitrator must be freed from unnecessary detail.  This shows respect for their time.


113 – The administrator “holds no economic or social viewpoints that influence its administration of any particular arbitration.”  


“Nor does the administrator hold or express opinions upon any award rendered.”


This is a sharp departure from some trade organizations’ idea of arbitration.


114 – This modern administrator is a democratic and not an arbitrary one.  It recognizes local pride in the selection of members of its National Panels from the different communities.”


Parity in administration is vital.  “In labor relations, this principle cannot be too meticulously followed, for in this field of human relations, the slightest deviation or oversight serves to arouse suspicion and any omission or dereliction may be regarded as intentional.”


116 – The administrator must be impartial and work at “avoiding self-seeking throughout its entire operation”  This enhances public confidence and the benefit to society.


This also applies to modern administrators in international systems of arbitration.




Page 117


Arbitration reduces the amount of discord.


“It is certain that any instrumentality which reduces the burden of waste and cost of disputes to a nation is  an activating power for the advancement of civilization.”


This is seen in the movie industry, the fur importing industry and the air transportation industry.


119 – When a deadlock ensues, so-called arbitrators, really agents of the parties, commence to bargain to secure a third person favorable to their parties point of view.


120 – In a shipping dispute, “shippers might view with some suspicion a proceeding conducted in the country of the buyer, and would feel more confidence in a proceeding recommended by American traders,.”


Often the acceptance of a promise to arbitrate changed the parties attitudes towards controversy.  Friendship becomes characteristic of relations.


121 – “These illustrations among many, indicate how arbitration clauses have become an instrument of civilization. But in order to have them continue as such instruments, certain conditions must prevail.”


1)     a written promise to arbitrate in the future.

2)     They must “come into general use in all kinds of human and contractual relations where conflict and dispute threaten that civilization.”

3)     They must “demonstrate the presence of good faith, confidence, and goodwill.”

4)     These clauses “should strengthen the belief in a system of free enterprise by emphasizing individual responsibility and competence in the control of disputes, and by applying self-restraining, self-regulation, and increasing self-confidence.”

5)     The clauses must be general so that all unforeseen disputes can be arbitrated.


122 – “A country is immensely more tranquil and secure that builds up reserves of goodwill and good faith among its people.  Arbitration clauses are a means of increasing them. Their prevalence indicates a high level of these reserves.  Therefore, the cultivation of the spirit of arbitration as an American way of life makes for a strong nation of happy individuals and of cooperative organizations.  To this end, the arbitration clause is being used in the organization of American arbitration and in international systems projected for the benefit of all peoples.”







Page 125



“One of the first acts of the Association was to lay a foundation of knowledge for an international system of arbitration among the twenty-one American Republics.  The first step was a survey, made in 1926, of arbitral practice and laws in Mexico.”


They chose the American Republics because a the Pan American Union (PAU) system already existed.  The PAU Financial Conference of 1915 endorsed a principle of commercial arbitration.  In 1923 the Fifth International Conference of American States suggested chambers of commerce reach arbitration agreements. 


127 – A survey found Latin American arbitration laws were based on the Spanish version of Code Napoleon.  The US ones on English common law.


129 – In 1934 the AAA and the Council on Inter-American Relations  founded the Inter-American Commercial Arbitration Commission; headed by Spruille Braden.    It was centered in Rockefeller plaza.


It worked towards standardization of arbitration law.


130 – In many early cases good offices were more required than arbitration.


131 – Early on no charges were made for adjustment / mediation services.


132 – In 1942 a grant enabled the Commission to send its executive secretary to Latin America to organize National Committees.  IN 1946 grants allowed a new survey and made possible guides in English, Spanish and Portuguese.


For details see “Western Hemisphere of Commercial Arbitration” By Martin Domke and FK.  Published in University of Toronto Law Journal, Vol 6, (1946), p. 307.


133 – “The Commission has demonstrated that people of widely different cultures and traditions and languages, far distant from each other, can dispose of their differences without enmity or resort to force.”




Page 134


135 – “It was found that eight of nine Canadian provinces had arbitration laws which closely followed the provisions of the English Arbitration Act of 1889 and therefore closely approximated the best of the modern arbitration statutes in the United States.”


In 1943, along with the Chamber of Commerce, the AAA created the Canadian-American Commercial Arbitration Commission (CACAC).


Frances Kellor, the First Vice-President, signed the agreement on behalf of the AAA. 


136 – The CACAC balanced its members by nationality.


138 – It has one headquarters in Quebec and another in Rockefeller Plaza.

The members of the Panels serve without remuneration.


139 – “While it is contemplated that all of the hearings in any case will usually be held in the country where the proceedings were initiated, it is permissible for the parties to agree otherwise.”


The Canadian location does disputes of all of the 22 Western Hemisphere nations.  So all are bound together.




Page 140


Although administered separately and organized by different groups, , together they make a unified system of arbitration for the international trade of 22 countries.


They started differently, the American system being created by businessmen and the Inter-American by government and politicians, it is a joint agreement.


141 – All parties have followed rules similar to the AAA.   But in unifying, all parties only need to learn one kind of procedure and one form of administration.  They have trained personnel and facilities in all 22 nations.


142 – Under the joint clause, parties are given wide latitude to exercisae their right to determine in what country and under what Rules they will arbitrate.


They also cooperate in exchanging publications.  For example, all look at the AAA’s Arbitration Journal.


143 – “Permeating this entire Western Hemisphere structure of commercial peace is the cultivation of the spirit of arbitration through the education of the peoples of each country in the knowledge and use of arbitration.”  “it bridges the differences created by diverse languages, customs, and traditions.”






Page 144


“Although extensive funds are available for the advancement of peace and security, none seems to have been directed to the practical necessity of acquainting people with the mechanics of peace that are involved in the settlement of economic disputes.”


The task of education is stupendous.  To begin with “What are the laws and practice of arbitration in different countries? Are people interested? Do they practice it?


145 – A survey is needed.


In 1947, the AAA began the publication of an International Arbitration Bulletin.  Unfortunately, outside of the Western hemisphere such publications cannot be put into the language of the people of different countries, so cannot stimulate thinking and interest.


146 – People need to understand techniques so they can arbitrate.  And general education is also needed.


None of the educational experiments have undertaken any systematic education of governments in the application of arbitration.  “In democratic countries, this may have to be preceded by public interest impressing itself upon the governments.  In other countries, like the Soviet Union, . . . education of the people may not be so feasible.”


147 – Education is being led by the Research Institute for the Advancement of the Science of Arbitration.


Even with a well formulated program, “Projection of its recommendations or program into action among the many peoples of the world remains the single greatest problem in making international arbitration an effective instrument against war.”




Page 148


Going beyond the Western hemisphere, the AAA is working on joint arbitration clauses which allow for the mutual use of facilities. 


The first such arrangement was done in 1939 with the Manchester, England, Chamber of Commerce.   Suspended during the War, in 1946 it was revised and is working.


149 – In 1939 the AAA entered into an agreement with the International Chamber of Commerce. They agreed to push arbitration clauses in contracts that would specify the use of the AAA in the US and Chamber facilities outside.


In 1947 they specified that the above held if no parties wanted another arrangement.


151 - In 1947 the AAA made an arrangement with the London Court of Arbitration.


152 – In 1939 they entered an agreement with the Chamber of the Philippines that will be enacted, “as soon as the economic reconstruction of the Philippines permits.”


This has also been proposed for Chinese – American trade.  This was done via the US Department of State. 


153 – The arrangements have not been made “as the Chinese Government has first undertaken to establish a Chinese Arbitration Association as their co-operating organization with the AAA.”


They are working with one for the Netherlands.


154 – A problem is that people make clauses in foreign trade contracts without there being facilities for arbitration in the countries involved.  


156 – Via the state department, the AAA is trying to get into discussions on the ITO. 




Page 157


“The American Arbitration Association knows that a way to international peace and security lies through world trade by the organization of international systems of arbitration.”


It has organized 22 nations and has post-WW II agreements pending with more.  It has a Declaration of Principles to this end. 


#1. “Conflict is a fundamental law of human nature.  It is universal and ineradicable.  Out of conflict grow grievances and disputes.  Commerce must, therefore, be concerned with their amelioration, control, and direction as well as their elimination.” 


#2 “Economic conflict, wherein things of ascertainable value are at stake, presents the most disastrous controversies of far-reaching power.  As they most vitally affect the welfare, happiness, and progress of peoples all over the world, the control of economic conflict and disputes should be a first concern.”


#4 “Voluntary arbitration, fully and freely exercised by individuals offers an expeditious alternative to force and thereby contributes, to the safety, happiness, and tranquility of all people.  It is a part of the process by which people govern themselves, through free enterprise and freedom of contract.”


#5 “Arbitration, being an instrumentality for the administration of justice, as well as for the advancement of understanding, its methods of strengthening confidence and co-operation among nations and among their peoples, should be impartial, non-profit-making, and non-partisan.”


#7 – “As the general purpose of arbitration is to advance goodwill, good faith, confidence and co-operation through the establishment of a belief in and a practice of arbitration as a counterbalance to the forces of destruction let loose through conflict and war, the scientific organization of arbitration is indispensible if it is to have adequate power to combat organized force.”


The system is needed to make all this more than a dream. 


#1: WW II disrupted so much that we need to survey the world’s laws; “particularly in countries where new forms (159) of freedom or of government are under consideration or in process.”


#2: This has to be more than just what businesses arrange.  An organizing body is needed.


#3: Facilities and laws must be improved prior to all the surveys being done.


160 - #4: Arbitration laws should work towards a higher degree of uniformity.


New arbitrators must be trained around the world.  And, international bodies, like the UN, and the ITO need education: they don’t fully understand arbitration.






Page 167


Arbitration was part of the Jay Treaty of 1794 between the US and Britain.


Some of the significant policies now obtaining in commercial and industrial arbitration are for the first time here briefly recorded:


The advances towards China; Americans getting arbitration; limited government interference so that self-regulation can go on; civil and corporate meaning, people too have access to arbitration; using labor to stop work stoppages; more Americans thinking arbitration is a good idea when strikes are threatened; (169) the rising philosophy of foresight and prevention; the country no longer believing that we can afford the waste that comes from not arbitrating.


But the practice of arbitration is what is most outstanding. 


170 – In 1926 there was one headquarters; now there are 31 offices. There was one local panel of 400 men; now there are 12,000 on national panels. Not just one, there are panels in 1,527 communities. There are three systems; three in the Western hemisphere and one international.


From a few thousand dollars, to more than half a million spent annually on arbitration.


In the 20 years since the founding, approximately 30,000 cases have been submitted to the AAA. 


Classes in universities are another indicator of growth.


171 – Now 77 per cent of arbitration are by legal counsel.  In 1947 more than 2,000 matters were referred to arbitration.




Page 172


172 – 1920 - Enactment of first modern Arbitration law – New York State.

1925 – Enactment of US Arbitration Law.


173 – 1926 the first case with the AAA the day after its organization, was under the standard form of contract of Actor’s Equity Association of A.F. of L.


174 – 1933 Accident Tribunal Established.


175 – Use of Motion Picture Tribunals for advancing war production.



1927 – Study of Central and South American arbitration. 


1947 – 1,031 matters submitted for arbitration in inter-American context.



1934 – Establishment of London – NY arbitration Service via American Chamber of Commerce in London and the AAA.


179 – 1943 Canadian – American Commercial Arbitration Commission organized.


1944 – Negotiations open with the Chinese.


180 – Inroads being made in Netherlands, Japan (proposal submitted to military authorities) Turkish and Chinese government (forming their own). 




Page 181



Lucius R. Eastman, Chariman;  Buchard and Fowler for the Arbitration Foundation.  Cobb and Warburg for the Arbitration Society of America.



Frances Kellor


185 – 1947 Board of directors: Frances Kellor

186 – Honorary presidents of 1926  include Charles Evans Hughes and Herbert Hoover.


Different tribunals and members are listed for pages.


Affiliated Trade Associations are listed.

Organizations participating in educational work.


203 – Arbitration Committee of 1926 with Frances Kellor


204 – Arbitration Committee of 1947 includes Frances Kellor ex officio.


211 – Inter-American Commercial Arbitration Commission Members, 1947

Frances Kellor


212 – Inter-American Arbitration Committee, 1947 includes Frances Kellor


215 – International Business Relations Council 1947 includes Kellor




Page 219


Page 231


Page 235


236 – “When each party appoints a partisan or an advocate, the judicial character of the office is violated and it is the parties who pull down its high character.”


237 – The court of appeals said, When once he enters into an arbitration he ceaases to act as the agent of the party who appoints him.”