Author: William W. Park*
Published: December 2003
Categories of Disputes
If a pollster asked a random selection of Americans for a one-line verbal portrait of arbitration, common responses might include the following: (i) private litigation arising for construction and business disputes; (ii) a mechanism to resolve workplace tensions between management and labor; (iii) a process by which finance companies and stock brokers shield themselves from customer complaints; (iv) a way to level the playing field in deciding commercial controversies among companies from different parts of the world; (v) the way big corporations use NAFTA to escape regulation. To some extent all would be correct.
Unfortunately, these different varieties of arbitration have all been squeezed into the same antiquated arbitration statute. Enacted 75 years ago as a simple procedural device to enforce arbitration in federal courts, the Federal Arbitration Act (FAA) has now been pressed into service as a body of substantive law that binds state courts as well, requiring that arbitration agreements be enforced on the same footing as other contracts. The Act is as ill-suited to such use as an allterrain vehicle. As drafted, the FAA ignores critical distinctions in the level of judicial supervision suitable to different types of cases. The laissez faire court scrutiny appropriate to an international proceeding, between sophisticated business managers with access to competent counsel, may be quite misplaced in a consumer case, where an arbitration clause might require an ill-informed…
*Professor of Law, Boston University. Vice President, London Court of International Arbitration. Copyright William W. Park © 2003.