What Law Governs The Process Of Arbitration?

On behalf of Wolf Popper LLP

Arbitration is commonly used in the business world to resolve a wide variety of disputes, and it can be a very useful tool for this purpose. As a process that falls outside the court system, arbitration has certain advantages over litigation. For one thing, it allows for greater flexible in resolving disputes. Arbitration can be either voluntary or mandatory, whether by statute or contract, as well as binding or non-binding, and also allows for greater privacy in resolving disputes.

Arbitration also gives parties the ability to select who will hear their dispute and the rules that will govern the process. Arbitration is commonly used to resolve commercial disputes, both domestically and overseas, and the laws applicable to the process vary accordingly, depending on the terms of the arbitration agreement. 

Domestically, arbitration is governed by both state and federal law. The Federal Arbitration Act is usually the law that governs the arbitration of disputes, unless the parties clearly express their intention to use state arbitration law in place of, or in addition to, the Federal Arbitration Act. The FAA imposes both substantive and procedure rules regarding the arbitration process.

Parties can, however, choose to change the rules of the arbitration process to suit their needs, and these changes are allowed by the Federal Arbitration Act, provided the parties clearly express their intention to do so. Making a careful selection about the rules that govern the process can be an important decision to ensure the process is set up fairly and impartially.

International arbitration is also an increasingly common occurrence for businesses. In our next post, we'll look at the law that governs international arbitration.