Expected Impact Of New Legislation On State Arbitration Regimes

A new statute - the Revised Uniform Arbitration Act - has been proposed for enactment by the legislatures of the 50 states of the United States. The statute will apply to arbitrations held in each state that enacts the new law. It will apply to the arbitration of both international and domestic disputes. As a state statute, however, the new law will be effective only to the extent it is not inconsistent with US federal law, namely the Federal Arbitration Act and judicial decisions interpreting and applying that act.

The Revised Uniform Arbitration Act was approved and recommended for enactment by the highly influential National Conference of Commissioners on Uniform State Laws in 2000. To date the revised act has been adopted by only two states, Hawaii and New Mexico. However, it has been introduced for consideration in the legislatures of six other states and is likely eventually to be widely adopted. The law is intended to supersede the Uniform Arbitration Act, which was promulgated by the National Conference in 1955, and which has since been either enacted or used as the basis of arbitration statutes in 49 states and the District of Columbia.

This update outlines some of the salient provisions in the proposed revised act, and notes a few provisions that may be subject to challenge in some cases on the ground that they are inconsistent with the Federal Arbitration Act and are consequently pre-empted by federal law. Decisions of the US Supreme Court have made it clear that state statutes may fill in gaps left by the Federal Arbitration Act, but, to the extent that they undermine the pro-arbitration policies of the federal law, the state laws are of no effect. Regardless of how widely the new act is adopted, the Federal Arbitration Act will remain the dominant law in arbitrations of all disputes involving interstate or international commerce in the United States.

Validity Of Arbitration Agreement

Section 6 of the revised act codifies the doctrine of separability (of the arbitration clause) developed under federal case law and applied by a majority of the states. The leading case is the US Supreme Court case of Prima Paint v Flood & Conklin Manufacturing Co, 388 US 395 (1967). Section 6 provides that whether an agreement to arbitrate exists and whether it covers a particular dispute is for the courts to decide. Under Section 4(a), however, the parties may agree that this provision shall not apply, and may leave to the arbitrator the question whether there is a valid arbitration clause governing their dispute. In any event, whether a contract containing a valid arbitration clause is itself valid remains a question for the arbitrator.

Section 6 includes a related rule borrowed from the United Nations Commission on International Trade Law (UNCITRAL) Model Law. Section 6(d) states that while a challenge to an arbitration clause is pending in a court, the arbitration...