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Federal Arbitration Act from 1920s Still Current Today

Thursday, November, 3, 2011


The Federal Arbitration Act was originally written in 1925 but it has become a popular area of contention in the last two years due to controversial Supreme Court rulings interpreting the decades-old federal statute.  Making the issue all the more contentious is the fact that the recent rulings have been far from unanimous; indeed, the court has split along clear ideological lines, leading some Democrats in Congress to believe that these rulings are grounded more in a certain political philosophy than in the law or Constitution.

 

Two Proposals Take Aim at Federal Arbitration Act

 

Two different laws have been proposed to reduce the ‘footprint’ that mandatory arbitration currently has in people's lives.  These laws are the Consumer Mobile Fairness Act and the Arbitration Fairness Act.  Both take issue with contracts that contain mandatory arbitration clauses in the fine print.  These clauses prohibit people from taking their disputes to court, requiring them instead to have them resolved by a panel of arbitration attorneys.  This panel functions in some ways like a court, but with one important exception -- there is usually no right to appeal.

 

Arbitration can be used to resolve a diverse range of conflicts, encompassing everything from tax arbitration to construction arbitration.  The practice tends to cost less in terms of both time and money than court-based solutions, but it does have its critics.