Search terms: Arbitration, USA
The US courts often wrestle with the recurring question of who should determine certain threshold issues, such as whether a party waived its right to arbitrate a claim. In a recent case a New York federal court reaffirmed that courts, not arbitrators, have the authority to determine whether a litigant had waived the right to arbitration by adopting a position inconsistent with that right in that court.
Legislation is pending in Congress to amend the Federal Arbitration Act. While Congress’s intent is to protect certain individuals with inferior bargaining power from being coerced into arbitration, the proposed legislation could potentially undercut the desirability of arbitration as a preferred dispute resolution method between businesses.
In March 2008 the US Supreme Court addressed the vexing issue of whether parties to an arbitration agreement may expand the grounds for expedited judicial review of an arbitral award beyond those provided in the Federal Arbitration Act. The court held that judicial review is limited to the narrow grounds listed in Sections 10 and 11. The court’s decision has now been analyzed and applied by several lower courts.
A New York federal court has held that when the International Court of Arbitration of the International Chamber of Commerce (ICC) finds that a dispute is not prima facie arbitrable and refuses to refer it to an arbitral tribunal, the party seeking to enforce the arbitration agreement must move to compel arbitration against the other party and cannot instead seek injunctive relief against the ICC court.
The US Supreme Court has held that when parties agree to arbitrate all questions arising under a contract, the Federal Arbitration Act supersedes any state law that grants primary jurisdiction over the dispute to an administrative agency. The decision reaffirms that the act confers exclusive jurisdiction on arbitrators to determine a challenge to the underlying contract’s validity.
Parties to an arbitration agreement have long turned to courts to obtain preliminary relief in order to preserve the status quo pending resolution of their dispute by arbitration. However, this apparently straightforward objective has resulted in some unusual decisions in both US state and federal courts. Two recent cases explored certain enduring questions arising from this issue.