Federal Arbitration: State Court Ruling
The Federal Arbitration Act may be the law of the land, but Texas has just implemented a major change to how arbitration awards will be reviewed in that state. In so doing, the Texas Supreme Court issued a ruling that interprets arbitration law differently than the recent ruling from the US Supreme Court. The decision concerned an interpretation of the Texas Arbitration Act.
Federal Arbitration Rules and the Right to Appeal
The Federal Arbitration Act greatly limits the rights of parties to appeal the decision of an arbitration attorney. The Texas Arbitration Act, in contrast, allows more rights to appeal. The issue as framed by the Texas Supreme Court asked, "Can the parties agree that an arbitrator has no more power than a judge, so that his decision is subject to review, the same as a judicial decision?"
In answering this question, the Texas Supreme court held that nothing in the Texas Arbitration Act prohibited such agreements. Therefore, the parties to a dispute are allowed to agree that decisions will be subject to appeal. The US Supreme Court, however, has held that the Federal Arbitration Act can indeed prohibit such agreements between the parties in dispute. This is the second time in as many months that US Supreme Court rulings on arbitration issues have become newsworthy.
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