Arbitration is becoming an increasingly popular alternative to traditional litigation for resolving disputes. An arbitration agreement is a contract between two parties agreeing to resolve any disputes that may arise between them through arbitration. However, the question arises, what law governs arbitration agreements? This article will explore the answer to this question.
The Federal Arbitration Act (FAA) is the primary law governing arbitration agreements in the United States. The FAA was enacted in 1925 and served to establish arbitration as a viable alternative to traditional litigation. It applies to all contracts involving interstate commerce, including employment agreements, consumer contracts, and commercial contracts.
The FAA provides that a written arbitration agreement is “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” This means that as long as the arbitration agreement complies with state and federal law, it is enforceable and binding on the parties.
Additionally, each state has its own arbitration laws that may apply to certain contracts. These laws vary from state to state, but they generally follow the FAA`s lead in promoting arbitration as a viable alternative to traditional litigation.
It`s important to note that certain types of disputes may not be subject to arbitration agreements. For example, some states prohibit arbitration agreements in certain healthcare contracts, such as nursing home admission agreements. Additionally, certain employment disputes are excluded from arbitration agreements under state and federal law.
In summary, the FAA is the primary law that governs arbitration agreements in the United States. As long as the arbitration agreement complies with state and federal law, it is generally enforceable and binding on the parties. However, there are certain exceptions where arbitration may not be an appropriate or legal option for dispute resolution. As always, it`s best to consult with an experienced attorney to determine the best course of action in any legal matter.