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By George H. Friedman*

As we enter this Independence Day weekend, I am inspired to compose a blog post on the often surprising relationships between our nation’s founders and arbitration. OK, the smash Broadway hit Hamilton also played a role. Either way, although America’s founders came from diverse political and socioeconomic backgrounds, some[1] seemed to like arbitration. Below I’ve collected some snippets on a few well-known signers of the Declaration of Independence, and some famous non-signer patriots. And, who knew that in 1733 a dispute over the construction of what was to become Independence Hall in Philadelphia was submitted to arbitration? Read on.

 During the period after the Revolutionary War and prior to Washington’s inauguration, Samuel Adams urged that every treaty entered into by the new country contain an international arbitration clause.[2]

Ben Franklin’s biography states “He was also much consulted by private persons about their affairs when any difficulty occurred, and frequently chosen an arbitrator between contending parties.”

I couldn’t find John Hancock’s views on arbitration, but his namesake life insurance company uses an arbitration clause in its policies.

John Jay didn’t sign the Declaration of Independence, but he was our first Secretary of State and first Chief Justice of the Supreme Court. A biography states: “He proposed that America and Britain establish a joint commission to arbitrate disputes that remained after the war – a proposal which, though not adopted, influenced the government’s use of arbitration and diplomacy in settling later international problems.” However, this eventually resulted in the Jay Treaty of 1794, which indeed called for arbitration.

Who was the Treaty’s primary architect? Non-signer and first Secretary of the Treasury Alexander Hamilton, who in describing this aspect of the Treaty said: “Is there any good objection to the mode of arbitration? It seems impossible that any one more fair or convenient could have been devised, and it is recommended by its analogy to what is common among individuals.”[3]

Attorney Thomas Jefferson in 1771 represented a litigant in Bolling v. Bolling, a dispute over a Will. Apparently, the case was so complex that the parties submitted it to arbitration.

Readers may recall my Presidents Day blog post, where I offered a little primer on the little-known relationships between our presidents and arbitration. Let’s conclude by revisiting George Washington, another non-signatory. Our first Commander in Chief’s Last Will and Testament from July 1799 calls for arbitration to resolve disputes among his heirs:

 

I hope and trust that no disputes will arise concerning [my Will]; but if, contrary to expectation, the case should be otherwise from the want of legal expression, or the unusual technical terms, or because too much or too little has been said on any of the devises to be consonant with the law, my will and direction expressly is, that all disputes (if unhappily any should arise) shall be decided by three impartial and intelligent men, known for  their probity and good understanding; — two to be chosen by the disputants — each having the choice of one — and the third by those two — which three men thus chosen, shall unfettered by Law, or legal constructions, declare their sense of the Testator’s intention … and shall be binding as if issued by the U.S. Supreme Court.

Conclusion: what’s next?

As I said back in February, the ADR views of our next president are hard to predict. The current presumptive major party nominees have different worldviews about arbitration. As a Democrat, Hillary Clinton will follow the anti-mandatory-arbitration company line. She personally came out against mandatory arbitration in May after the Consumer Financial Protection Bureau proposed its rule limiting class action waivers in consumer financial contracts. Said the presumptive Democratic nominee: “Mandatory arbitration clauses buried deep in contracts for credit cards, student loans, and more prevent American consumers from having their day in court when they’ve been harmed.” On the other hand, she won an arbitration in March 2005 over use of the domain name hillaryclinton.com, so who knows how she really feels about arbitration? Check out the award.

Donald Trump probably likes arbitration, both as a businessman and as a successful user of the process. In 2012, he won $5 million in a dispute with a former Miss USA contestant who defamed the pageant, which he owned. More recently, Mr. Trump a year ago filed an arbitration claim against NBC after the network cancelled a contract to televise the Miss USA and Miss Universe pageants. This followed Mr. Trump’s negative comments about Mexican immigrants. But, he and Secretary Clinton do have something in common: he, too, won an Internet domain name arbitration, back in 2010.

Of course, life can be full of surprises. Where might a President Gary Johnson stand on the issue? I couldn’t find anything on his arbitration views, but the Libertarian Party Platform states: “We support the right of private employers and employees to choose whether or not to bargain with each other through a labor union. Bargaining should be free of government interference, such as compulsory arbitration or imposing an obligation to bargain.”

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*George H. Friedman, an ADR consultant and Chairman of the Board of Directors of Arbitration Resolution Services, Inc., retired in 2013 as FINRA’s Executive Vice President and Director of Arbitration, a position he held from 1998. In his extensive career, he previously held a variety of positions of responsibility at the American Arbitration Association, most recently as Senior Vice President from 1994 to 1998. He is an Adjunct Professor of Law at Fordham Law School. Mr. Friedman serves on the Board of Editors of the Securities Arbitration Commentator.  He is also a member of the AAA’s national roster of arbitrators.  He holds a B.A. from Queens College, a J.D. from Rutgers Law School, and is a Certified Regulatory and Compliance Professional.

[1] I know that every signer didn’t like arbitration. This is by no means a comprehensive analysis!

[2] See Journal of Education, vols. 95-6, p. 241, available here.

[3] See The works of Alexander Hamilton: Containing His Correspondence, vol. 6, p. 82,  available here.

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