The Minimal Role of Federalism and State Law in Arbitration

Abstract:     
State arbitration law currently plays an atrophied and minimal role. Modern Supreme Court arbitration cases leave little room for the application of state arbitration law or policy. Federalism principles are ignored by these cases, despite the appropriate custom of deferring to state contract law norms. State arbitration laws have been preempted using an unusual preemption approach that eschews the more common obstacle test. State arbitration laws are also ignored by a series of cases that grant discretion to the arbitrator to decide procedural issues without any meaningful judicial review. We are left with an odd situation in which the only two situations in which state arbitration law applies are where the parties select state law in their agreement to arbitrate or where a transaction is truly intrastate in nature. Each of these situations is uncommon, leaving little role for state arbitration law in the arbitration field.

Keywords: Arbitration, State Arbitration, Supreme Court, Federalism

JEL Classifications: K00, K2

Accepted Paper Series