Article by Jeffrey W. Stempel
The United States Arbitration Act (the “Act”) states that arbitration agreements contained in contracts involving interstate commerce are specifically enforceable “save upon such grounds as exist at law or in equity for the revocation of any contract.” Despite this seemingly clear statutory directive, courts have failed to provide coherent and fair enforcement of arbitration agreements. The process seems starkly polarized: either an arbitration clause is routinely enforced despite available contract revocation defenses; or the matter is termed exempt from arbitration under a public policy exception despite the clearly valid arbitration agreement. Both of these courses are too extreme and fail to appreciate the individual circumstances of the contestants. Although the current judicial regime for construing arbitrability may reduce the courts' administrative burden of individual factfinding and decisionmaking, it does so at too high a cost in fairness, logic, and faithfulness to the text and intent of the Arbitration Act.
This Article suggests that courts more frequently apply notions of contractual consent and fairness to decide arbitrability questions, eschewing both rigid formalism and unfettered public policy exceptions. The current false dichotomy creates inconsistencies that greatly aid some classes of litigants while ignoring others. Despite the obvious importance of preventing arbitration contracts from becoming oppressive, courts have failed to develop a doctrine of arbitration contract defenses. When courts refuse to enforce an arbitration agreement, they apply the unnecessarily blunt hammer of public policy all too often, wrongly viewing it as the only tool available for policing the Act. Simultaneously, courts have overlooked the language of the Act that holds the most promise for preventing unfairness and vindicating congressional and contractual authority. Rather than hammering out ad hoc exceptions according to the nature of the dispute, courts should employ the more varied tools of common-law contract expertise to examine the quality of consent in arbitration agreements.
This Article proposes that courts recognize and develop five defenses to arbitrability unrelated to the nature of the claims in dispute. Part I of this Article briefly reviews the Act. Part II discusses the judicial use of the contract revocation defenses provided by the Act and the judiciary's occasional resort to public policy exceptions. Part III proposes a principled doctrine of arbitration contract rescission as a better approach to arbitrability.
About the Author
Jeffrey W. Stempel. Associate Professor of Law, Brooklyn Law School. B.A. 1977, University of Minnesota; J.D. 1981, Yale Law School.
Citation
65 Tul. L. Rev. 1377 (1991)