Aragaki on Szalai’s Outsourcing Justice: The Rise of Modern Arbitration Laws in America

Friend of Indisputably Hiro Aragaki (Loyola, Los Angeles) shares his thoughts on Imre Szalai’s (Loyola, New Orleans) new book Outsourcing Justice: The Rise of Modern Arbitration Laws in America.  And don’t forget to follow Imre’s blog of the same name ( which most appropriately states “By reading this blog, you agree to arbitrate.  (Just kidding)”


If you are looking for an interesting arbitration “read” this summer, I have just the book for you: Outsourcing Justice: The Rise of Modern Arbitration Laws in America, by Imre Szalai, a professor of law at Loyola Law School in New Orleans.  Outsourcing Justice adds to Professor Szalai’s growing corpus of historical research on arbitration law in America, including An Obituary for the Federal Arbitration Act: An Older Cousin to Modern Civil Procedure, 2010 J. Disp. Resol. 391 (2010) and Aggregate Dispute Resolution: Class and Labor Arbitration, 13 Harv. Negot. L. Rev. 399 (2008).

Szalai’s 202-page book—which is accessible to lawyers and laypersons alike—traces the history of arbitration law in the U.S. from the eighteenth century through the enactment of the Federal Arbitration Act in 1925, focusing primarily on the 1911 to 1925 period.  “Wait a minute,” you might say, “didn’t Ian Macneil already do that?”  Well, yes.  But whereas Macneil paints in broad strokes, Szalai delves into meticulous detail, providing an almost week-by-week account of the crucial period between the enactment of the first “modern” arbitration statute in 1920 to the passage of the FAA five years later.  By way of example, the chapter covering 1920-1925 has more than 800 footnotes!

Using newspaper articles, monthly bulletins of the New York Chamber of Commerce, reports of various trade and bar associations, and other overlooked sources, Szalai brings leading figures of the arbitration reform movement to life and truly manages to transport the reader to another time.  Also unlike Macneil, Szalai manages to situate and explain features of the arbitration law reform movement in the context of broader historical events and movements: the First World War, progressivism, growing interest in international arbitration treaties, and the movement to reform judicial procedure (famously inaugurated by Roscoe Pound’s “The Causes of Popular Dissatisfaction with the Administration of Justice”).  The connection that Szalai draws to the judicial reform movement in particular (which is also the subject of one of his articles mentioned above) is something that I, too, have been grappling with in my own work-in-progress.  My own view is that understanding that connection better will be crucial if we want to marshal intelligent counterarguments to blasé claims about the “purposes and objectives” of the FAA—an elusive concept that has wreaked much havoc in the Court’s recent arbitration jurisprudence.  Szalai has done the heavy lifting for us in this area.

But perhaps the crowning achievement of this book is that it brings to light archival material that, to my knowledge, nobody has ever written about.  Ever.  Szalai sifted through boxes and boxes of the New York Chamber of Commerce’s dusty records now housed at Columbia University.  (I myself read a tiny fraction of these records some years ago in New York and can tell you that this is no easy, quick, or painless undertaking.)  The records include things like minutes of meetings, personal notes, and letters written by leading figures in the arbitration movement such as Julius Henry Cohen and Charles Bernheimer.  They enabled Szalai to reconstruct events and behind-the-scenes maneuverings that have thus far been lost to history.  For example, we get a glimpse of meetings that Bernheimer had with Congressmen and business representatives whom he was trying to persuade to endorse the arbitration bill, just days before and after key Congressional hearings in 1923 and 1924.

The last chapter, entitled “Concluding Observations,” tries to tease out some of the implications of this historical research for the way that the modern Court has interpreted the FAA.  Szalai concludes that the Court has butchered the statute, inter alia, by interpreting it to apply to ordinary employment agreements—something that was never intended by Bernheimer and his colleagues.  He reaches a similar conclusion as to consumer agreements, but here he concedes that the historical evidence is less clear.  This may come as a surprise to many, since the dominant view is that FAA was only intended to apply to transactions between merchant peers (and thus never contemplated consumer transactions).  From my own research into the period, though, I think Szalai is right to question the received orthodoxy on this point even though he appears in the final analysis more sympathetic to it than not.

Last but not least, Szalai has a website, http:/, which contains a few interest images of people and documents from the early part of the twentieth century, so make sure to check that out as well.

Happy reading!

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