International Arbitration Comparative Guide

1 Legal framework

1.1 What is the relevant legislation on arbitration in your jurisdiction? Are there any significant limitations on the scope of the statutory regime - for example, does it govern oral arbitration agreements?

The Federal Arbitration Act, 9 USC § 1 et seq (FAA), governs arbitration agreements in contracts involving interstate commerce; it applies in both federal and state courts. The only specific requirement for enforceability under the FAA is that the arbitration agreement be in writing (9 USC §§ 2-4). Section 12 of the FAA provides that where the FAA applies, an agreement to arbitrate "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract" (9 USC § 12). The same contract principles that apply to contracts generally under state law apply to arbitration agreements under the FAA.

1.2 Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?

The same arbitration law governs both domestic and international arbitration proceedings, and is set forth in three chapters located in Title 9 of the US Code.

Chapter 1 (9 USC § 1 et seq) codifies the FAA and sets forth general provisions applicable to arbitration agreements involving maritime, interstate or foreign commerce.

Chapter 2 (9 USC § 201 et seq) implements the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards ('New York Convention'). The provisions of Chapter 1 apply to foreign arbitral awards and proceedings only "to the extent that chapter is not in conflict with" the New York Convention (9 USC § 208).

Chapter 3 (9 USC § 301 et seq) implements the 1975 Inter-American Convention on International Arbitration ('Panama Convention'). Should a conflict arise between Chapter 1 and Chapter 3, the provisions in Chapter 3 apply (9 USC § 307). Where both the New York and Panama Conventions could apply to the enforcement of an arbitral award, the New York Convention controls, unless the parties indicate that the Panama Convention should apply (9 USC § 305).

1.3 Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration?

The United States has not enacted the UNCITRAL Model Law. Eight states, however, have enacted statutes based on the Model Law: California, Connecticut, Florida, Georgia, Illinois, Louisiana, Oregon and Texas. The FAA and the Model Law have several similar provisions, but differ in other significant respects. The main differences relate to:

the number of arbitrators and the method of their selection in the absence of party agreement; the authority of the arbitral tribunal to rule on its own jurisdiction (competence-competence); the power of the courts to correct or modify an award; and the grounds for setting aside an award. Several issues addressed by the Model Law are not addressed by the FAA. These include:

the availability of provisional measures from a court; the disclosure obligations of the arbitrators; the means of challenging an arbitrator's alleged impartiality; the arbitrator's authority, in the absence of party agreement, to determine the venue and language of the arbitration and the governing law; the tribunal's right to appoint experts; procedures to follow upon default; and the form of the arbitral award.

1.4 Are all provisions of the legislation in your jurisdiction mandatory?

The FAA contains no mandatory rules governing arbitral proceedings sited in the United States.

1.5 Are there any current plans to amend the arbitration legislation in your jurisdiction?

There are no current plans to significantly amend the FAA. However, courts continue to interpret its provisions. A divided US Supreme Court, in Epic Sys Corp v Lewis, __US__, 2018 WL 2292444 (21 May 2018), held that class action waiver provisions in employer-imposed arbitration agreements are enforceable and do not violate the National Labor Relations Act. The court observed that: "In the Federal Arbitration Act, Congress has instructed federal courts to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings." The controversial decision resolves a split in the federal courts of appeals on the issue.

1.6 Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?

The United States acceded to the New York Convention in 1970 and implemented its provisions in Chapter 2 of Title 9 of the US Code. There are two reservations. First, the United States recognises only awards made in another state that has ratified the Convention. Second, the United States applies the convention only to matters recognised under domestic law as "commercial". Courts have construed these reservations narrowly (Karaha Bodas Co v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 364 F3d 274 (5th Cir 2004)).

1.7 Is your jurisdiction a signatory to any other treaties relevant to arbitration?

Chapter 3 of the FAA (9 USC § 301 et seq) implements the Panama Convention. In addition, the United States has signed and ratified the Washington Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (1965). The United States also has 20 bilateral free trade agreements in force and is a party to 42 bilateral investment treaties. These trade and investment agreements provide a limited right for investors from one contracting state to arbitrate claims lodged against the state in which they invested.

2 Arbitrability and restrictions on arbitration

2.1 How is it determined whether a dispute is arbitrable in your jurisdiction?

Enforcement of an arbitration provision involves two analytical steps: determining whether the parties entered into an arbitration agreement and whether the dispute at issue is covered by that agreement. In addition, there is a third crucial question: whether the agreement clearly and unmistakeably delegated these threshold questions of arbitrability to the arbitrator or whether they remain with the court (Rent-A-Center, West, Inc v Jackson, 561 US 63, 79 (2010)).

2.2 Are there any restrictions on the choice of seat of arbitration for certain disputes?

Arbitrations have hearing locations as well as the place of legal residence, also known as where venue is located or, in international arbitrations, as the arbitral seat. The arbitral seat is the domicile of the arbitration, where courts that have jurisdiction to enforce arbitration orders (or, in certain circumstances, appoint arbitrators) are located. While the legal residence is often the physical location where the hearings take place, the parties are free to designate the seat they wish, regardless of the location of the arbitration hearings. There are no restrictions on the choice of seat based on the nature of the dispute.

3 Arbitration agreement

3.1 What are the validity requirements for an arbitration agreement in your jurisdiction?

Under the Federal Arbitration Act (FAA), an arbitration agreement must be in writing. Apart from this requirement, an arbitration agreement can contain whatever terms the parties wish. However, to ensure the enforceability of the arbitration clause and any award, the agreement should:

unambiguously designate arbitration as the form of dispute resolution, specifying that any award rendered is binding on the parties; clearly define the scope of the arbitration clause - that is, the categories of disputes subject to arbitration - so that it covers any and all such disputes arising under or in connection with, or relating to, the commercial contract; designate the procedural rules of the arbitration and any administering institution; designate the place of arbitration - that is, where the arbitration is formally located as a matter of law or its juridical seat; specify the number of arbitrators, their qualifications and the method of their selection; specify the language of the arbitration; include a choice of law clause specifying the substantive law applicable to the contract and the resolution of any disputes; provide that the FAA governs the arbitration agreement and the arbitration process; and provide that judgment may be entered on the arbitral award by any federal or state court having jurisdiction.

3.2 Are there any provisions of legislation or any other legal sources in your jurisdiction concerning the separability of arbitration agreements?

Federal and state courts have held that an arbitration clause is severable from the underlying contract (Prima Paint Corp v Flood Conklin Mfg Co, 388 US 395, 401 (1967) ("arbitration clauses as a matter of federal law are 'separable' from the contracts in which they are embedded"); Rent-A-Center, West, Inc v Jackson, 561 US 63 (2010) (affirming Prima Paint rule); Hamblen v Hatch, 242 Ariz 483 (2017) (separability doctrine applies under Arizona's Uniform Arbitration Act)). Accordingly, an arbitrator has jurisdiction to hear a contract dispute, without court intervention, when a party challenges the contract but not the arbitration clause itself (Prima Paint, 388 US 395 at 403-04 (contract alleged to have been fraudulently induced)). The separability principle is recognised by the rules of the various arbitral associations (eg, see American Arbitration Association (AAA), Commercial Arbitration Rule R-7(b) ("The arbitrator shall have the power to determine the existence or validity of a contract of which an arbitration clause forms a part. Such an arbitration clause shall be treated as an agreement independent of the other terms of the contract")).

3.3 Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties?

When the parties have not agreed on the seat and/or language of the arbitration, the institutional rules governing arbitrations typically provide default rules. AAA Rule R-11(a), for example, provides that: "When the...