Congress enacted the Federal Arbitration Act in 1925. It has served us as well for three-quarters of a century. Under the act, if the parties agree to a contract affecting interstate commerce that contains a clause requiring arbitration, the clause will be enforceable in court. The parties can generally present evidence and be represented by counsel. And the decision-makers will apply the relevant state law in resolving the dispute.
Arbitration is generally quicker and less expensive than going to court.
In recent years, there have been some cases where the arbitration process has not worked well, but thousands of disputes have been fairly and effectively settled by arbitrators. Such a system is even more important because of skyrocketing legal costs where attorneys require large contingent fees. Accordingly, I have opposed piecemeal legislative changes to the act. Instead, I believe the time has come for a comprehensive review of how arbitration works and what we can do to enhance its effectiveness. The approach of reforming arbitration, rather than abandoning the arbitration process provides several benefits.