Federal Arbitration Act

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The Federal Arbitration Act of 1925 overcame courts' refusals to enforce agreements to arbitrate, the origins of which were in the English common law when courts fought for extension of their own jurisdiction. American courts had followed English practice.

The Federal Arbitration Act was thought to represent an exercise of Congress' Article III power to "ordain and establish" federal courts, U.S. Const., Art. III, § 1. See Southland Corp. v. Keating, 465 U.S. 1, 28, n.16 (1984) (O'Connor, J., dissenting) (collecting cases). Only in 1967 did the U.S. Supreme Court hold that the Act "is based upon and confined to the incontestable federal foundations of 'control over interstate commerce and over admiralty.'" Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 405 (1967) (quoting H. R. Rep. No. 96, 68th Cong., 1st Sess., 1 (1924)).

Two Supreme Court rulings in 2011 and 2013 strengthened the enforceability of arbitration provisions.[1]

In AT&T Mobility LLC v. Concepcion (2011), Justice Antonin Scalia wrote a 5-4 decision for the Supreme Court hold that Section 2[2] of the Federal Arbitration Act (FAA) prohibits States from conditioning the enforceability of certain arbitration agreements on the availability of classwide arbitration procedures.

In DIRECTV, Inc. v. Imburgia (2015), Justice Breyer of the Supreme Court went further and held that Section 2 preempts a state-law interpretation of arbitration when the state law “does not rest ‘upon such grounds as exist ... for the revocation of any contract.'"

Moreover, state courts are even using the Federal Arbitration Act as a basis for refusing to apply any judicial review to an arbitration award, even when an arbitration agreement or arbitration award violates public policy or is unethical.

References

  1. https://thinkprogress.org/wall-street-has-rigged-the-system-against-consumers-these-lawmakers-want-to-fight-back-d2ac90422200
  2. “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U. S. C. §2