Originally from The American Review of International Arbitration (ARIA)

PREVIEW

I. INTRODUCTION

While the federal policy favoring arbitration is codified in the 1925 Federal Arbitration Act (FAA), the strength of that policy depends on the treatment that arbitration receives in federal courts and in the United States Supreme Court in particular.

Courts in all jurisdictions play an important role in fashioning the treatment of arbitration agreements, arbitral proceedings and arbitral awards. However, the judicial role in this regard is especially pronounced in the United States, in view of the problematic state of legislation on the subject. The federal legislation on arbitration is 100 years old and has never been meaningfully amended.  The FAA basically reads as it did upon its enactment, except to implement the New York and Panama Conventions on the recognition and enforcement of international arbitral awards. In addition, the federal government does not have exclusive legislative authority, even over international arbitration. Arbitration is also subject to State law provided it is not inconsistent with federal law and policy.

Upon enactment, the FAA broke new ground by stating that “a written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy arising out of such contract… shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”  On this basis, the Supreme Court declared that the FAA “is a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary” and that it “create[s] a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act.”

That said, the FAA has only rudimentary provisions on the enforcement of arbitration agreements and arbitral awards. It says virtually nothing—certainly compared to arbitration legislation in other jurisdictions—about how international arbitrations seated in the U.S. should be conducted. Absent federal law on the subject, U.S. courts have little basis on which to prescribe matters of arbitral procedure. The plentiful case law that exists deals disproportionately little with the conduct of arbitral proceedings themselves. U.S. case law on international arbitration dwells heavily on the role of courts themselves in enforcing agreements to arbitrate, in supporting arbitral proceedings, and in determining the validity of awards, either in actions to annul arbitral awards or to secure their recognition and enforcement.