Government Without Taxation: The Courts

The purpose of the courts is to resolve disputes between individuals, whether criminal or civil in nature. In criminal cases, the courts determine the guilt or innocence of an accused criminal and the punishment of the guilty. In civil cases, the courts arbitrate a resolution in a dispute—for example, a breach of contract.

In any semi-free country criminals are a small percentage of the population. In a free society, the number of criminal cases would be substantially less than today. Voluntary actions—such as prostitution and drugs—would not be crimes, and the absence of these cases would greatly reduce the case load on the criminal courts.

While their conviction and punishment of actual criminals is important, resolving contractual disputes is a much larger and significant role. Long-term interactions between individuals depend upon the cooperation of those involved, and such relationships are typically codified in a contract—a written agreement identifying the responsibilities of each party. A unilateral breach of that agreement can have significant consequences on the other parties. Those consequences can be devastating to the plans and actions of those parties.

A breach of contract is a form of force—it is the intentional withholding of property or services. For example, if a contract calls for the delivery of certain materials by a specific date, the failure to do so deprives the purchaser of property that is rightfully his. His plans—the actions dependent upon those materials—cannot be taken.

Resolving such disputes—identifying the victim and the appropriate penalties—is the primary function of the courts. This is a legitimate and important value to individuals. Without the courts, each individual would be required to enforce the contract, and he would likely meet armed resistance. The result would be gang warfare.

The benefits of resolving disputes should be obvious. It allows the parties to recover damages. If a long-term relationship is involved, such as between labor and management, it allows the parties to clarify their respective responsibilities. Individuals recognize the value provided by dispute resolution, and they willingly pay for that service.

In recent decades, alternative dispute resolution (ADR) services, such as mediation and arbitration have gained popularity as efficient and inexpensive methods for resolving disputes. Many contracts now mandate ADR as the means for resolving any disputes arising from the contract.

Arbitration allows all parties to present their case in an informal setting. The arbiter—often an expert in the particular issues in question—issues a binding ruling after considering the facts of the case. Mediation involves a third-party who tries to find an acceptable compromise between the parties in dispute. Upon acceptance by all parties, that agreement becomes binding. Many courts are now requiring mediation prior to trial for cases involving lesser dollar amounts.

ADR can be utilized in many different ways. The Better Business Bureau offers ADR services to its members and consumers. The parties to a dispute can select a mutually acceptable third-party to arbitrate or mediate, such as an attorney, a retired judge, or an industry expert. The parties can agree to use an ADR service, such as those offered by the American Arbitration Association or other private companies.

While ADR is usually performed outside the auspices of the courts, the rulings of arbiters and the agreements reached through mediation are generally enforceable in court. Because of its informal nature, ADR simply offers a faster, less expensive means for resolving disputes versus litigation.

Judicial Arbitration and Mediation Services (JAMS), and the American Arbitration Association provide a high volume of services to primarily corporate clients. For example, in 1992 JAMS generated revenues of 25 million dollars and handled roughly 12,500 cases. In the same year the American Arbitration Association handled 60,000 cases.

As with the police and military, individuals recognize the need for the courts, and they will voluntarily pay for those services.

Updated on April 8, 2010 with links to all of the posts in this series:
Government Without Taxation: Introduction
Government Without Taxation: The Size of Government

Government Without Taxation:  The Police and Military

Government Without Taxation: The Courts

Government Without Taxation:  Other Revenue Sources

Government Without Taxation: Final Thoughts