Analyzing the Federal Arbitration Act of the United States

Arbitration has long been the preferred method of resolving commercial disputes in the USA. The Federal Arbitration Act of the United States was first enacted in 1925. The Arbitration Act offers the statutory framework for the recognition and enforcement of arbitration agreements and awards. Arbitration in the United States is by agreement of the parties, which are generally free to choose the substantive law that will apply.

It is likely that 2019 will see more institutions enter into strategic partnerships with other institutions, universities, business councils, firms, and other stakeholders. For arbitration to truly experience explosive growth, such partnerships must be meaningful and serve to promote genuine collaboration. Commercial arbitration is extensively used in the US to resolve a wide variety of business disputes, from ordinary contract disputes to more specialized disputes in the construction, energy, real estate, financial, banking, and insurance sectors.

The Federal Arbitration Act applies in both state and federal courts. Federal district courts have original, but not exclusive jurisdiction over matters arising under the Convention. Actions brought in state courts may be transferred (or “removed”) at any time before trial to federal court pursuant to the general rules on removal.

The Federal Arbitration Act applies to federal court proceedings relating to domestic (and international) arbitration (9 USC Sections 1-16, 201-208 and 301-307). The US federal law does not permit the appeal of  an arbitral award. However, it does provide for the vacatur or set-aside of  arbitral awards rendered in the United States in certain limited circumstances. Any such petition must be served within three months of  the parties receiving  the award.

The Federal Arbitration Act (FAA), a federal statute, regulates both domestic and international arbitration in the United States. Chapter 1 of the FAA, 9 United States Code (USC) sections 1-16, governs domestic arbitrations between US citizens. The arbitration practice in the United States of America occupies an exceptional position in the global international arbitration system and in arbitration’s historic advancement since there have been a vast number of U.S judicial decisions referenced by other countries’ courts.

The doctrine of freedom of contract is the driving force in American arbitration law and practice. The Foreign Arbitral Award Convention is an important tool in international arbitration. It deals with the enforcement and recognition of foreign arbitral awards and the referral by a court to arbitration.

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