A Brief Guide to the Acts & Conventions Governing US Arbitration

Arbitration is a form of alternative dispute resolution in which a neutral third party reviews the evidence of a dispute and makes a binding decision about the case. Arbitration keeps the dispute out of court and is often utilized in commercial disputes, particularly ones that involve international transactions.

Arbitration law can be incredibly complex, especially when considering the non-uniformity of laws in the various countries throughout the world. Even just within the US, the establishment and regulation of the rules and procedures regarding arbitration come from a number of different laws and treaties. The manner in which arbitration is carried out may vary significantly from case to case based on the circumstances of the dispute, such as whether the case is domestic versus international, involves investments or securities, or is located in a particular state.

In this blog we will provide a brief introduction to some of the most important acts and conventions that govern US arbitration law.

Federal Arbitration Act (FAA)

This law, enacted in 1925, is the primary authority governing arbitration in the United States, whether they are domestic or international in nature. However, the act itself does not establish specific or uniform procedures for arbitration. The purpose of the FAA is to ensure that  arbitration agreements are valid and enforceable under US law. The act, which is Title 9 of the US Code, also implements the New York Convention and the Panama Convention.

New York Convention

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known more popularly as the New York Convention, put forth a set of uniform rules to govern the recognition and enforceability of international arbitration awards. It was adopted by the United Nations in 1958, and the United States acceded to the rules by adding it under Chapter 2 of the FAA in 1970. All countries that adhere to the New York Convention are required to allow for private agreements to arbitrate and to enforce the awards granted by arbitrators. Over 150 countries have adopted the New York Convention. As with the FAA, the New York Convention does not establish uniform rules for private arbitration procedure.

Panama Convention

Known officially as the Inter-American Convention on International Commercial Arbitration, this convention lays out more specific rules with regard to arbitration procedure and processes, but only for commercial disputes. The Panama Convention’s goal was to broaden the scope of the rules set forth in the New York Convention. The Panama Convention convened in 1975, and the US became a party to the convention in 1990. The specific rules for procedure only apply, however, if the parties involved in arbitration have not otherwise agreed to adhere to specific procedures in their contract. 17 Western Hemisphere countries have adopted the Panama Convention including the United States.

This is just a brief introduction to the various governing authorities with regard to US arbitration. States also utilize their own arbitration statutes, though federal laws and treaties like those mentioned above usually supercede the state laws when applicable. There have been attempts to create uniformity of arbitration enforceability and procedure between the US states, most notably through the Uniform Arbitration Act and the Revised Uniform Arbitration Act, but only a limited number of states have ratified these rules.

If you would like to learn more about arbitration, or if you need legal counsel and representation for any domestic or international arbitration, please contact La Chuisa Law today.

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Written by La Chuisa Law