The Accidental Preemption Statute: The Federal Arbitration Act and Displacement of Agency Regulation
6 Penn. St. Y.B. on Arb. & Mediation 59 (2013)
17 Pages Posted: 30 Jul 2013
Date Written: 2013
The Yearbook on Arbitration and Mediation’s 2013 Symposium focused on the role of the courts and judicial review in arbitration and mediation. Considering this question, this Article examines the command of the Federal Arbitration Act (FAA) for courts to enforce private agreements to arbitrate and to confirm arbitral awards as judgments subject to limited grounds for vacatur, as the public judicial system is invoked to revere private arbitration agreements and awards — at times at the expense of significant public policy challenges and the displacement of agency regulatory procedures specifically designed to address public policy concerns.
In a series of decisions, the United States’ Supreme Court (U.S. Supreme Court) has declared the FAA as establishing a national policy favoring arbitration and emphatically declared that Section 2 of the FAA, which simply provides for the judicial enforcement of arbitration agreements, preempts state law rules that directly conflict with the FAA, single out or discriminate against arbitration, or otherwise “stand as an obstacle to the accomplishment of the FAA’s objectives.” The U.S. Supreme Court’s expansive interpretation of the FAA has resulted in the preemption of state legislative, judicial, and administrative laws, as well as the encroachment on federal legislative and administrative regulatory schemes. The judicial system, as mandated by U.S. Supreme Court decisions, has applied the FAA so expansively as to favor arbitration beyond the congressional intent. In short, the courts are used to elevate private arbitration contracts above state and even federal laws and administrative schemes specifically enacted for addressing public policy concerns. Although a patchwork of industry-specific legislative proposals have been promulgated in reaction, seeking to “reverse” FAA over-preemption, important statutory and administrative schemes are at risk of displacement by this general command to enforce private contracts under the Court’s standard of FAA preemption. As an alternative to the multitude of specialized legislative responses seeking to restore regulatory authority, Congress must amend the FAA to explicitly define the statute’s intended reach and reverse the Court’s preemption trend.
Keywords: Yearbook on Arbitration and Mediation, Judicial review, Federal Arbitration Act (FAA), Arbitral awards, Private arbitration agreements, United States Supreme Court, Preemption, Private arbitration contracts
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