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Reverse preemption of the FAA
January 14, 2006 by Ross Runkel at LawMemo

The 5th Circuit says that a Mississippi statute "reverse preempts" the Federal Arbitration Act (FAA).

The state statute prohibits required arbitration of disputes arising from uninsured motorist provisions in personal automobile insurance policies.

The FAA normally preempts any state statute that purports to invalidate an arbitration agreement. However, this case involved an insurance policy, and the federal McCarran-Ferguson Act has a narrow exception for state laws governing the insurance industry.

The 5th Circuit decided that the state statute took priority over the FAA, so the policy-holder was not obligated to arbitrate his claim against the insurance company.

American Bankers Insurance v. Inman (5th Cir 01/11/2006).

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