Federal Arbitration Act

The Federal Arbitration Act, of which the Convention on the Recognition and Enforcement of Foreign Arbitral Awards is a part, establishes a strong federal policy in favor of arbitration and the presumption in favor of arbitration carries special force when international commerce is involved.  Moreover, the liberal federal policy favoring arbitration agreements is essentially a policy guaranteeing the enforcement of private contractual arrangements.  However, arbitration may not be compelled in the absence of an agreement to arbitrate.[i]

Based on the court’s admiralty jurisdiction, a federal district court has subject-matter jurisdiction over a petition to compel the arbitration of a dispute arising under a vessel charter agreement.[ii]  Section 2 of the Federal Arbitration Act provides that a written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.  Furthermore, the Act establishes a federal policy favoring arbitration, requiring that courts vigorously enforce agreements to arbitrate.  Section 2 and the Act as a whole manifest a liberal federal policy favoring arbitration agreements.  The Act is a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate.[iii]

Pursuant to Section 4 of the United States Arbitration Act, 9 U.S.C.S. § 4, a party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court for an order directing that such arbitration proceed in the manner provided for in the agreement.  The district court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the district court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.  The hearing and proceedings shall be within the district in which the petition for an order directing such arbitration is filed.[iv]

 

[i] China Minmetals Materials Imp. & Exp. Co., Ltd. v. Chi Mei Corp., 334 F.3d 274 (3d Cir. N.J. 2003)

[ii] Johns v. Taramita, 132 F. Supp. 2d 1021 (S.D. Fla. 2001).

[iii] GKG Caribe, Inc. v. Nokia-Mobira, Inc., 725 F. Supp. 109 (D.P.R. 1989)

[iv] National Iranian Oil Co. v. Ashland Oil, 817 F.2d 326 (5th Cir. Miss. 1987)


Inside Federal Arbitration Act