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Arbitration agreements

Validity

What are the validity requirements for an arbitration agreement?

The Federal Arbitration Act explicitly requires that the arbitration agreement be in writing and included as part of a valid contract (9 USC Section 2). However, so long as there is a written arbitration agreement (stemming from a commercial transaction), Section 2 further states that such agreement “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract”. As the Federal Arbitration Act explicitly subjects arbitration agreements to ordinary contract rules, the rules regarding the validity of contract formation also apply.

Enforcement of agreements

How are arbitration agreements enforced in your jurisdiction? What is the attitude of the national courts towards arbitration agreements?

Arbitration agreements are enforced through the Federal Arbitration Act, which requires US district courts – once satisfied that the dispute before the court falls within the scope of the arbitration agreement – to “stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement” (9 USC Section 3).

Federal courts strongly favour arbitration. According to several Supreme Court cases, there is a “liberal federal policy favoring arbitration agreements” (Moses H Cone Memorial Hospital v Mercury Constr Corp, 460 US 1, 24 (1983)) and a “national policy favoring arbitration” (Buckeye Check Cashing Inc v Cardegna, 546 US 440, 443 (2006)).

Many state courts also favour arbitration, although the applicable laws vary from state to state.

Consolidation

Can an arbitral tribunal with its seat in your jurisdiction consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?

The Federal Arbitration Act does not expressly address the arbitral tribunal’s authority to consolidate separate proceedings. However, the act does provide that arbitration agreements will be enforced as written. Therefore, whether the tribunal has the authority to consolidate separate arbitral proceedings will typically depend on the arbitration agreement between the parties and/or the applicable procedural rules (see 9 USC Sections 2-4; John Wiley & Sons, Inc v Livingston, 376 US 543, 558 (1964); and Rule P-2 of the Commercial Arbitration Rules and Mediation Procedures of the American Arbitration Association, Including Procedures for Large, Complex Commercial Disputes).

Choice of law

How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

The Federal Arbitration Act does not expressly address the applicable substantive law. Absent an agreement between the parties, the arbitral tribunal will decide on the substantive law based on the conflict-of-law analysis that it deems appropriate. 

Separability

Are there any provisions on the separability of arbitration agreements?

The Federal Arbitration Act does not explicitly address the separability of the arbitration agreement from the underlying contract. However, separability has been established in the case law; in Prima Paint Corp v Flood & Conklin Mfg Co, 388 US 395, 409 (1967), the court ruled that:

[the] arbitration clause in the contract is ‘separable’ from the rest of the contract and that allegations that go to the validity of the contract in general, as opposed to the arbitration clause in particular, are to be decided by the arbitrator, not the court.”

Multiparty agreements

Are multiparty agreements recognised?

The Federal Arbitration Act does not expressly address multiparty agreements, although federal courts will enforce arbitration agreements as written. Provided that the multiparty arbitration agreement is “clear and unmistakeable”, the agreement will be recognised (see 9 USC Sections 2-4 and Volt Info Scis v Bd Of Trs, 489 US 468, 476). 

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