Arbitration Law: Who’s in Charge?

Source: Margaret L. Moses, Loyola University Chicago School of Law Public Law and Legal Theory Research Paper Series No. 2009-001

From the abstract:
In interpreting the Federal Arbitration Act (‘FAA”), the Supreme Court has not carried out the will of Congress, but instead, has created over the last twenty-five years a new law based upon its own policy preferences. The Court’s interpretation in a recent case, Hall Street v. Mattel, in conjunction with its earlier decision in Mitsubishi v. Soler, demonstrates how it has undervalued or ignored both the text of the statute and its legislative history. In disregard of Congress’s statutory commands, the Court has created a law which undercuts the protections Congress has adopted in the areas of civil rights, securities, consumer protection, antitrust and employment.

With respect to the arbitration of claims under mandatory law, many have called for heightened scrutiny of arbitrator awards. The Supreme Court, on the other hand, has shown in Hall v. Mattel that it wants no review whatsoever of an award based on a regulatory statute that may rest upon an erroneous conclusion of law. Congress needs to take back control of arbitration law and policy, consider overturning Hall v. Mattel through corrective legislation, and consider a complete overhaul of arbitration law to provide either for no arbitration of claims under mandatory law, or, at the least, for heightened scrutiny of arbitral awards based on such claims.

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