What is the Federal Arbitration Act?

The Federal Arbitration Act (FAA) provides the process and procedure for carrying out the arbitration. 

The FAA applies when the dispute is subject to mandatory federal arbitration or when there is a voluntary arbitration agreement and the dispute involves federal law.

Next Article: Judicial Review of Voluntary Arbitration Back to: ALTERNATIVE DISPUTE RESOLUTION

What rules govern the arbitration process?

The rules governing an arbitration vary depending upon whether the arbitration is voluntary or mandatory. 

In a voluntary arbitration, the parties may agree upon the rules to govern the proceeding. 

It is rare that the parties will specifically state all of the governing provisions; rather, the agreement to arbitrate will agree that statutory provisions or a set of model rules will govern the arbitration proceeding.

• Note: The Revised Uniform Arbitration Act of 2000 is a model law commonly employed in voluntary arbitrations.

In mandatory arbitration, state law or court order dictates the rules governing the arbitration. 

Notably, in 1925, Congress passed the Federal Arbitration Act (FAA) to encourage the use of arbitration to resolve conflicts. 

The FAA provides the process and procedure for carrying out the arbitration. 

The FAA applies when the dispute is subject to mandatory federal arbitration or when there is a voluntary arbitration agreement and the dispute involves federal law. 

Of course, the parties to voluntary arbitration may agree to a different set of laws, but applying FAA standards may affect a party's ability to enforce the arbitrator's award through the court system. 

Importantly, the FAA requires that where the parties have agreed to arbitrate, they must do so in lieu of going to court.

Discussion: Why do you think Congress found it necessary to establish uniform Federal Arbitration Procedures? How do you feel about a federal law attempting to control the state court procedure for recognizing and enforcing arbitration agreements?

Practice Question: Pam and Lisa enter into a contract with an arbitration clause covering any disputes. When a dispute arises, Pam and Lisa decide to submit the matter to arbitration. If the contract does not indicate, what rules apply to the arbitration process?

• Generally, state law would determine what are the default rules for arbitration. These vary from state to state. Most state arbitration procedures are similar to those of The Federal Arbitration Act of 1925. This Act is the governing arbitration legislation. It provides the laws and regulations that should govern the arbitration process. The FAA provides that, for the parties to apply for arbitration the arbitration agreement must be expressly written. This can be written as an express clause in the contract, or a separate arbitration contract between the parties or any other form of writing that the parties expressly indicate that arbitration shall be used. https://iclg.com/practice-areas/international-arbitration-laws-and-regulations/usa. In this situation, Pam and Lisa can enter a separate stand-alone arbitration agreement that will enable them to initiate the arbitration process.

Academic Research on the Federal Arbitration Act

Friedman, Stephen E., Protecting Consumers from Arbitration Provisions in Cyberspace, the Federal Arbitration Act and E-SIGN Notwithstanding (June 6, 2008). Catholic University Law Review, Vol. 57, No. 2, 2008; Widener Law School Legal Studies Research Paper No. 08-61. Available at SSRN: https://ssrn.com/abstract=1141927 

Sebok, Anthony J., The Unwritten Federal Arbitration Act (October 28, 2016). DePaul Law Review, Vol. 65, 2016; Cardozo Legal Studies Research Paper No. 505. Available at SSRN: https://ssrn.com/abstract=2860765 

Szalai, Imre S., Exploring the Federal Arbitration Act Through the Lens of History (July 1, 2016). 2016 Journal of Dispute Resolution 115; Loyola University New Orleans College of Law Research Paper No. 2016-07. Available at SSRN: https://ssrn.com/abstract=2811277 

Weston, Maureen A, Preserving the Federal Arbitration Act by Reining in Judicial Expansion and Mandatory Use (2007). Nevada Law Journal, Vol. 8, No. 385, 2007. Available at SSRN: https://ssrn.com/abstract=2461880 

Schwartz, David S., The Federal Arbitration Act and the Power of Congress Over State Courts. Oregon Law Review, Vol. 83, No. 541, 2004; Univ. of Wisconsin Legal Studies Research Paper Archival Collection. Available at SSRN: https://ssrn.com/abstract=1492304 

Frankel, Richard, The Federal Arbitration Act and Independent Contractors (August 28, 2018). Cardozo Law Review, Forthcoming; Drexel University Thomas R. Kline School of Law Research Paper No. 2018-A-07. Available at SSRN: https://ssrn.com/abstract=3240163 

Horton, David, The Mandatory Core of Section 4 of the Federal Arbitration Act (March 12, 2010). Virginia Law Review In Brief, Vol. 96, 2010. Available at SSRN: https://ssrn.com/abstract=1569783 

Sahani, Victoria, Comparing the Federal Arbitration Act and the UNCITRAL Model Law on International Commercial Arbitration (December 1, 2017). Comparing the Federal Arbitration Act and the UNCITRAL Model Law on International Commercial Arbitration, in INTERNATIONAL ARBITRATION IN THE UNITED STATES (Laurence Shore, Lawrence Schaner, Mara Senn, Tai-Heng Cheng, & Jenelle La Chuisa eds., Wolters Kluwer, 2017). Available at SSRN: https://ssrn.com/abstract=3046305 

Szalai, Imre S., An Obituary for the Federal Arbitration Act: An Older Cousin to Modern Civil Procedure (October 25, 2009). 2010 Journal of Dispute Resolution 391; Loyola University New Orleans College of Law Research Paper. Available at SSRN: https://ssrn.com/abstract=2224266