A Better Approach to Arbitrability

Historically, Anglo-American courts refused to enforce arbitration agreements, jealously guarding their dispute resolution monopoly. During the early twentieth century, merchants and attorneys began seeking legislation requiring courts to defer to arbitration. The United States Abitration Act took effect January 1, 1926 and has remained essentially unchanged. It was written with the implicit assumption that it would be invoked by commercial actors having relatively equal bargaining power and emotive appeal to a jury. The Act says nothing to direct the court\u27s inquiry concerning the quality of either party\u27s assent to the arbitration clause other than requiring a written arbitration agreement and referring to grounds for revocation available at common-law. Section 1 of the Act broadly defines key terms used subsequently in the Act. Section 2 provides that written agreements to arbitrate, whether part of an initial contract in commerce or in a maritime transaction or a separate agreement pertaining to such a contract, “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” The Act supplies the substantive rules for deciding whether to uphold an arbitration agreement, stay judicial proceedings, compel arbitration, confirm the award, vacate the award, or alter the award. Although there is some possibility of exception, the prevailing view is that even strong state statutory policies do not override the Act. Although the Act is considered substantive law, it imposes many procedural requirements upon the parties seeking to promote or attack arbitration. The Act also promotes arbitration by providing that litigation may be stayed by the court until completion of the arbitration. The court must first be “satisfied that the issue involved is referable to arbitration.” Section 4 authorizes federal courts to compel arbitration if a party refuses to honor an arbitration agreement. The Act states that any contractually specified method of arbitration shall be followed and provides subpoena power to the arbitrator. Sections 9, 10, and 11 deal with the confirmation, vacation, or modification of arbitration awards. The court must grant an order confirming the award unless the court finds the case to meet one of several narrow grounds. The courts have generally accorded these exceptions confined scope due to the limited enumerated grounds, the language of the section, and the Act\u27s goal of encouraging arbitration