Merchant Courts, Arbitration, and the Politics of Commercial Litigation

What is it about?

This article offers the first explanation of why Britain, unlike other major European economic powers, did not create merchant courts in the eighteenth century, and instead chose to resolve commercial disputes either through litigation in “ordinary” courts or through arbitration. From the Restoration until the 1750s, lawyers successfully resisted the development of merchant courts in order to protect their monopoly on litigation. (Such courts did emerge in the colonies, however, where the legal profession was less powerful.) In the 1760s, the need for a merchant court became more acute, as litigation levels rose, legal costs skyrocketed, and some merchants complained that existing methods of arbitration were inadequate. But just as merchant courts offered the greatest practical appeal, political polarization impeded institutional innovation, as radical Whigs became increasing unyielding in their opposition to any new court that might undermine civil juries. Meanwhile, various improvements in common law litigation, especially the expanded use of merchant juries, reduced pressure for more fundamental reform and allowed political concerns to predominate. As a result, an enduring fiction emerged that in the Anglo-American legal tradition, litigants resolved their disputes either privately or before courts of general jurisdiction—a fiction that continues to shape our assumptions about civil litigation.

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