Court Opinion

ID: 9579550
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:56:06.082628+00
Date Added: 2024-06-11T13:35:35.034230
License: Public Domain

On Motion for Rehearing.
The movant argues that the Federal Arbitration Act must be applied in its entirety. The Georgia cases do not so hold.
The two cases, which are cited by movant and were cited in the opinion, deal with the principle that state policy must yield to the express command of federal law where interstate commerce is involved, not that the Federal Arbitration Act has been engrafted into the state law by command of Congress. Indeed, as we shall see, this is diametrically opposed to congressional intent.
In West Point-Pepperell, Inc. v. Multi-Line Indus., 231 Ga. 329, 331 (201 SE2d 452) the Georgia Supreme Court held: “Where such a transaction involves commerce, within the meaning of the Federal Arbitration Statute, the state law and policy with respect thereto must yield to the paramount federal law.” The court quoted Section 2 of Title 9 USC that: “ ‘A written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ ” The court held that the Georgia policy, expressed in such cases as Parsons v. Ambros, 121 Ga. 98 (1) (48 SE 696) which held that arbitration agreements operating to oust courts of jurisdiction are void, must yield to national policy where the transaction involves interstate commerce. The court explained: “The United States Arbitration Act was intended to avoid the common law rule that an agreement between parties to a contract to settle any dispute between them by arbitration was void and against *45public policy as an effort to oust the courts of their jurisdiction.”
In Paine, Webber &c. v. McNeal, 143 Ga. App. 579 (239 SE2d 401) the court followed the West Point-Pepperell case, supra, and recognized that federal law is paramount. In that case the appellee argued that Georgia courts are bound only by substantive portions of the Act and not by the federal procedural law. The court agreed sub silentio by finding that Georgia law provided a remedy without resort to federal law, specifically to 9 USC § 3 which provides for a stay of proceedings pending arbitration.
There has been a body of holdings in the lower federal courts to the effect that where the Federal Arbitration Act is applicable, it constitutes national substantive law which must be upheld by courts of general jurisdiction in each of the states. See Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F2d 402, 406; Commercial Metals Co. v. Balfour, Guthrie & Co., 577 F2d 264. It should be noted that those cases are dealing with application of the law by federal courts. Moreover, the only federad court whose opinions we are bound to follow, the United States Supreme Court, has declined to make such a broad ruling. In Prima Paint v. Flood & Conklin, 388 U. S. 395, 404-405 (87 SC 1801, 18 LE2d 1270) the court held that with regard to the Federal Arbitration Act “... federal courts are bound in diversity cases to follow state rules of decision in matters which are ‘substantive’ rather than ‘procedural,’ or where the matter is ‘outcome determinative.’ [Cit.] The question in this case, however, is not whether Congress may fashion federal substantive rules to govern questions arising in simple diversity cases. [Cit.] Rather, the question is whether Congress may prescribe how federal courts are to conduct themselves with respect to subject matter over which Congress plainly has power to legislate. The answer to that can only be in the affirmative.”
The dissent in that opinion pointed out that: “The Court here does not hold today, as did Judge Medina [Robert Lawrence Co. v. Devonshire Fabrics Inc., 271 F2d 402, 407, supra] that the body of federal substantive law created by federal judges under the Arbitration Act is required to be applied by state courts. A holding to that effect — which the Court seems to leave up in the air — would flout the intention of the framers of the Act.” Prima Paint v. Flood & Conklin, supra at p. 424. It included documentation from the Congressional Record as to the statutory intent: “ ‘The primary purpose of the statute is to make enforcible in the Federal courts such agreements for arbitration, and for this purpose Congress rests solely upon its power to prescribe the jurisdiction and duties of the Federal courts.’ One cannot read the legislative history without concluding that this power, and not Congress’ power to legislate in the area of *46commerce, was the ‘principal basis’ of the Act. Also opposed to the view that Congress intended to create substantive law to govern commerce and maritime transactions are the frequent statements in the legislative history that the Act was not intended to be ‘the source of . . . substantive law.’ ” Supra, at 418-419. An incisive statement from the Joint Hearings, p. 28, was quoted: “Nor can it be said that the Congress of the United States, directing its own courts..., would infringe upon the provinces or prerogatives of the States. . . . [T]he question of the enforcement relates to the law of remedies and not to substantive law. The rule must be changed for the jurisdiction in which the agreement is sought to be enforced. . . . There is no disposition therefore by means of the Federal bludgeon to force an individual State into an unwilling submission to arbitration enforcement.”
Georgia has a method of and a basis for attacking an arbitration award as is set forth in Locklear v. Payne, 124 Ga. App. 845 (1) (186 SE2d 439): “Where, under the agreement, the decision of such third persons is to be final, the decision, if within the scope of the agreement, may only be attacked for fraud, or such gross mistake as would necessarily imply bad faith or the failure to exercise an honest judgment . . . The law favors an end to litigation and, where the parties agree to submit their dispute to another for settlement and that such settlement shall be final, the matter will be reopened only on an affirmative showing of fraud, accident, or mistake.”
Thus, one is not deprived of a valuable right nor is the paramount federal policy favoring arbitration in any way diminished by a Georgia court applying its own state law vis-a-vis grounds for setting aside an award rather than the grounds that federal district courts are required to utilize.
We note that a perusal of the multitudinous decisions involving 9 USC are virtually all by federal courts except in certain rare instances such as Western Constr., Inc. v. Oregon-Southern, 101 Idaho 145 (609 P2d 1136), involving a collective bargaining agreement, which case recognized that because of the all pervasive command of the Labor Management Relations Act that federal law and the Federal Arbitration Act would be applied in its entirety by the state court.
In summary, the Federal Arbitration Act expresses a policy that arbitration agreements arising out of a transaction involving interstate commerce are to be enforceable by all courts of this land. However, the all inclusive aspects of the Act are directed only to the federal courts who must apply this law in its entirety regardless of former federal decisions in this area and regardless of the law of the situs state of such federal court.
*47Under the circumstances here, we find no plainly manifest congressional intent to impose the same statutory grounds — explicitly detailed as a basis for a federal district court to set aside an arbitration award — on a state court which is passing upon such matters.
Since the predicate for setting aside the award in the case sub judice were violations of 9 USC § 10 which was not applicable to this case, and since we also note there is nothing to show a reason for setting aside the award under Georgia law, we adhere to our decision affirming the decision of the lower court.

Rehearing denied.

Carley, Judge.
While I agree with the majority that the Motion for Rehearing should be denied, I cannot concur in what the majority says in its addendum filed in connection with the Motion for Rehearing. Therefore, I adhere to my special concurrence to the original majority opinion.