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Analysis of Supreme Court's View of Federal Arbitration Act

Thursday, May, 12, 2011

The Federal Arbitration Act is a congressional statute designed to govern arbitration rules in the nation, but according to Los Angeles Times columnist Erwin Chemerinsky, the high court has seriously misconstrued the statute.  At issue is the part of the act that states that arbitration clauses are not to be enforced when "state law deems them to be unenforceable."  Courts in California have held on many occasions that arbitration clauses ruling out class-action lawsuits are indeed unenforceable, yet the high court recently sided with business interests and ruled that such clauses are enforceable instead.  According to Chemerinsky, this demonstrates that the court is willing to ignore the clear language in the federal law itself.

Federal Arbitration Act Designed to be Neutral

The federal law does not overtly favor businesses or consumers but lays out rational procedures so that alternative dispute resolution can be used in a fair environment that will encourage the use of out-of-court process.  This is designed to benefit both plaintiffs and defendants, both of whom will save money as well as time if they can avoid the judicial system.  

With the new ruling, however, the intention of neutrality could be in danger; Chemerinsky believes that "the court's conservative majority could not have been clearer that it was favoring businesses over consumers".


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