Commercial Arbitration Agreements Between Sophisticated Parties: An Empirical View

This paper studies the incidence of arbitration agreements in com-mercial contracts by analyzing all contracts that have been electroni-cally disclosed to the Securities Exchange Commission on the periodic, interim, and merger reports (forms 10-K, 10-Q, 8-K, and S-4). The main sample includes approximately 200,000 contracts disclosed by 35,000 companies from 1996 to 2012. We find considerable heterogene-ity in the incidence of arbitration provisions across contract subject, contracting parties, governing law, and over time. In particular, em-ployment contracts exhibit both relatively high arbitration rates and growth in these rates. Contracts governed by non-U.S. law and con-tracts between parties of different countries are also more likely to include an arbitration provision. 1