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Arbitration Lesson #5 - History part 3
July 12, 2006 by Ross Runkel at LawMemo

The Federal Arbitration Act (FAA) is the main legal engine behind enforcement of individual agreements to arbitrate.

Passed by Congress in 1925, the FAA was intended to put arbitration agreements on the same footing as other contracts. The translation: Agreements to arbitrate must be enforced by the courts on the same basis that courts enforce any other contract. Likewise, any normal reason for not enforcing a contract (unconsionability, for example) applies equally to arbitration agreements.

The most significant FAA section is Section 2:

Section 2. Validity, Irrevocability, And Enforcement Of Agreements To Arbitrate.

A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. 9 U.S.C. § 2.

The US Supreme Court has ordered enforcement of agreements to arbitrate claims arising under a variety of federal statutes, including anti-trust statutes, RICO, and the Equal Credit Opportunity Act.

The Supreme Court also decided that the FAA preempts any state law that is hostile to arbitration. Southland Corporation v. Keating, 465 U.S. 1 (1984).

What has the Supreme Court said about arbitrating employment law claims that normally would go to court? For example, the Age Discrimination in Employment Act (ADEA), Title VII, and others. That's the topic for the next lesson.

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