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Why is arbitration of rights common in U.S. collective-bargaining agreements?

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The Code of Hammurabi diorite stela, with carved figures at the top showing Hammurabi seated with cuneiform inscriptions below. — Labour law Diorite stela inscribed with the Code of Hammurabi, 18th century bce.

In the United States, arbitration of rights is a cornerstone of collective-bargaining agreements, serving as the final step in the grievance procedure for more than 90 percent of such contracts.12

Unlike many other nations that rely on government-appointed labour or industrial courts to resolve disputes, the U.S. system favors this private, expert-led process to interpret and apply existing contract terms. This approach is utilized to settle disagreements regarding discipline, discharge, working conditions, and various benefits without resorting to strikes.123

The prevalence of this practice is driven by several factors:
* Efficiency and Expertise: Arbitrators are often experts in industrial relations who provide binding decisions without the strict procedural constraints of formal courts.1
* Stability: By establishing a clear, final mechanism for resolving even minor workplace disputes, the process helps maintain operational precedents and industrial peace.1
* Flexibility: Parties can choose their own arbitrators, including permanent umpires who possess deep, ongoing knowledge of the specific industry and the history of the management-union relationship.1

Decisions rendered by these arbitrators are rarely reviewed by courts, as both parties typically comply with the awards.1