On this side of the Atlantic, arbitration is a kind of alternative dispute resolution. In simple terms, arbitration happens to be a substitute for litigation. Since the United States is nothing but a federal system, arbitration legislation has its existence at both state and federal levels. The federal statute that tends to govern arbitration is the FAA or the Federal Arbitration Act.
The Supreme Court of the country states that section 2 of the Federal Arbitration Act provides for the validity enforceability, as well as irrevocability of arbitration agreements, is essential, meaningful, or considerable federal law that is applicable in state courts about every transaction that has an impact on interstate commerce. Here are the primary types of arbitration in the United States.
Labor Arbitration is generally of two types – interest arbitration and grievance arbitration. Regarding interest arbitration, governments have usually relied on arbitration to resolve labor disputes that were generally of a larger scale. As an example, you can consider the Coal Strike of 1902. The type of arbitration where the onus to decide on collective bargain agreement is on the neutral arbitrator, is called interest arbitration.
A detailed form of interest arbitration, called the Experimental Negotiating Agreement, was adopted by the United Steelworkers of America during the 70s decade. This was a measure to prevent workers from going on strikes since such situations pushed the industry into a vulnerable state and a weak entity in worldwide competition. As far as grievance arbitration is concerned, the employers, as well as the unions, avail this service to resolve any issue or grievance, which crops up between the employee and members of the union. The Amalgamated Clothing Workers of America and the War Labor Board adopted this method. For more information, you can check out the National Academy of Arbitrators.
Arbitration has been the preferred choice for the United States securities industry. The method has always been useful in resolving disputes between a brokerage firm and its customers and even between two brokerage firms. There is a different set of rules under which this arbitration procedure generally operates.
As per the records, securities arbitrations are held by the FNRA or the Financial Industry Regulatory Authority. the securities industry uses pre-dispute agreements on arbitration. Through these agreements, the concerned parties decide upon arbitrating their disputes before the occurrence of any such dispute. These pre-dispute agreements were, according to the available records, were upheld by the Supreme Court. In today’s times, all disputes, more or less, involving the brokerage firms tend to get resolved in arbitration.
Several state court systems have court-order arbitration. The most prominent example, in this case, is family law, especially dealing with child custody. Judicial arbitration is a technique to resolve the advisory dispute. This method is the first step towards solving a conflict, but, of course, not binding on the parties involved in the conflict. Trial de novo is an option then. Litigation attorneys are known to present their case to an independent lawyer, who opinionates on the settlement. If the parties concerned choose to continue by resolving the disputes between them, it is possible to impose sanctions during the initial arbitration, according to the terms of the contract.
Validity Of Arbitration Clauses
Even though the arbitration clauses are valid if you can challenge them in court regarding their compliance with public policy. It can be on the grounds of being unconscionable and, as a result, unenforceable. Insurance regulation happens as per the McCarran-Ferguson Act at the state level, and this makes arbitration a bit complicated process. There was an instance when the United States district court came to know that the Department of Insurance was not authorized to nullify the arbitration agreement.
We hope you’ve found answers to a lot of your questions on Arbitration. If not, you could also take the help of the television to understand the process better. Not sure what that means? Well, there are several legal shows on American television, such as Judge Judy and The People’s Court that have gained popularity over the years. These are the ones that are known for binding arbitration. You can catch any of those shows live on TV to know more about arbitration without actually dragging someone to the court of law.