Arbitration as Contract: The Need for a Fully Developed and Comprehensive Set of Statutory Default Legal Rules

Abstract

This article analyzes the United States Federal Arbitration Act, as a statutory framework for effective arbitration of contract disputes. While arbitration under this Act has been subject to ever increasing criticism and calls for reform on a variety of fronts — most often from the perspective of consumer or employment arbitration — this article focuses specifically on commercial, business-to-business arbitration and critically evaluates the Act as a set of default legal rules governing arbitration as a unique contractual business relationship. The article first looks at arbitration from a contractual default rules perspective and then employs this perspective to analyze: (1) the existing federal statutory scheme; (2) the developing body of federal “common law” governing arbitration; (3) the potential impact of state legislation governing arbitration; and (4) the use of private rules to govern arbitration. Finally, the article looks at the related doctrines of “competence-competence” and separability under U.S. law, specifically focusing on the Supreme Court’s recent decision in Rent-a-Center, West, Inc. v. Jackson. The article ultimately concludes with a call for an entirely new federal statute governing both domestic and international commercial business-to-business arbitration.

Keywords: arbitration, contract, statutory default legal rules, FAA, New York Convention, Panama Convention, alternative dispute resolution, ADR, UNCITRAL model law, RUAA, competence-competence, IACAC, UNCITRAL arbitration rules