Opinion ID: 2509558
Heading Depth: 2
Heading Rank: 1

Heading: The FAA's Purpose

Text: In 1925, Congress passed the FAA to overrule the judiciary's longstanding refusal to enforce agreements to arbitrate and to place such agreements `upon the same footing as other contracts, where it belongs.' [Citation.] ( Dean Witter Reynolds Inc. v. Byrd (1985) 470 U.S. 213, 219-220, 105 S.Ct. 1238, 84 L.Ed.2d 158) ( Byrd )). The federal statute rests on the authority of Congress to enact substantive rules under the commerce clause, requiring courts to enforce arbitration agreements in contracts involving interstate commerce. ( Southland Corp. v. Keating (1984) 465 U.S. 1, 10-11, 104 S.Ct. 852, 79 L.Ed.2d 1 ( Keating ).) Here, the parties agree that the contracts at issue involve interstate commerce and, thus, fall within the coverage of the FAA. Section 2, the primary substantive provision of the FAA, provides: A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. (9 U.S.C. § 2.) Section 2 is a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary. The effect of the section is to create a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act. ( Moses H. Cone Memorial Hospital v. Mercury Constr. Corp. (1983) 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 ( Moses H. Cone ).) Thus, the FAA establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability. ( Moses H. Cone, supra, 460 U.S. at pp. 24-25, 103 S.Ct. 927.) The policy of enforceability established by section 2 of the FAA is binding on state courts as well as federal courts. ( Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 405, 58 Cal.Rptr.2d 875, 926 P.2d 1061 ( Rosenthal ).) However, the FAA's purpose is not to provide special status for arbitration agreements, but only to make arbitration agreements as enforceable as other contracts, but not more so. ( Prima Paint Corp. v. Flood & Conklin Mfg. Co. (1967) 388 U.S. 395, 404, fn. 12, 87 S.Ct. 1801, 18 L.Ed.2d 1270.) In accord with this purpose, the high court has stated that state contract rules generally govern the construction of arbitration agreements. (See, e.g., Doctor's Associates, Inc. v. Casarotto (1996) 517 U.S. 681, 685, 116 S.Ct. 1652, 134 L.Ed.2d 902 ( Doctor's Associates ) [`[s]tate law, whether of legislative or judicial origin, is applicable if that law arose to govern issues concerning the validity, revocability, and enforceability of contracts generally']; First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 [state law principles governing formation of contracts generally apply in deciding arbitrability issue]; Allied-Bruce Terminix Cos. v. Dobson (1995) 513 U.S. 265, 281, 115 S.Ct. 834, 130 L.Ed.2d 753 [States may regulate contracts, including arbitration clauses, under general contract law principles....].) [T]he federal policy is simply to ensure the enforceability, according to their terms, of private agreements to arbitrate. ( Volt, supra, 489 U.S. at p. 476, 109 S.Ct. 1248.) Thus, the FAA does not force parties to arbitrate when they have not agreed to do so (see Byrd, supra, 470 U.S. at pp. 219-220, 105 S.Ct. 1238) or require them to do so under any specific set of procedural rules ( Volt, supra, 489 U.S. at pp. 476, 479, 109 S.Ct. 1248). Arbitration under the Act is a matter of consent, not coercion, and parties are generally free to structure their arbitration agreements as they see fit. Just as they may limit by contract the issues which they will arbitrate [citation], so too may they specify by contract the rules under which that arbitration will be conducted. ( Volt, supra, 489 U.S. at p. 479, 109 S.Ct. 1248.)