International Arbitration Comparative Guide

• Published date: 10 November 2022
• Subject Matter: Litigation, Mediation & Arbitration, Disclosure & Electronic Discovery & Privilege, Arbitration & Dispute Resolution, Court Procedure, Sovereign Immunity: Public Sector Government, Class Actions, Trials & Appeals & Compensation, Civil Law
• Law Firm: Zeiler Floyd Zadkovich
• Author: Mr Luke Zadkovich and Edward W. Floyd

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?

Arbitration in the United States is governed by the Federal Arbitration Act, 9 USC ' 1 et seq (FAA). The FAA is split into three chapters and sets out the basic legal principles applicable to arbitration in the United States. It applies to all arbitration agreements in maritime transactions and contracts involving interstate or foreign commerce, and is applicable in both federal and state courts.

The scope of the FAA is limited in four respects:

• It is not applicable to contracts of employment of seamen, railroad employees or any other class of workers engaged in interstate commerce (9 USC ' 1; Circuit City Stores, lnc v Adams, 532 US 105 (2001); New Prime Inc v Oliveira, 139 S Ct 532 (2019);
• It requires the arbitration agreement to be in writing in order to be enforceable (9 USC ' 2)
• The common law principles that apply to contracts generally under state law apply to arbitration agreements under the FAA, meaning that an arbitration agreement will not be enforceable under the FAA if it is unenforceable at law or in equity (9 USC ' 2); and
• The FAA also does not directly apply to arbitrations arising out of a collective bargaining agreement (Coca-Cola Bottling Co of NY v Soft Drink & Brewery Workers Union Local 812 Int'l Bh of Teamsters, 242 F3d 52, 54-55 (2d Cir 2001).

In addition to the FAA, each of the 50 states has enacted separate legislation governing arbitration in its respective jurisdiction. Where a conflict arises between the FAA and state law, the FAA will prevail.

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

The FAA does not provide a definition of 'domestic' or 'international' arbitration proceedings.

Chapter 1 (9 USC ' 1 et seq) sets out the general provisions applicable to arbitration agreements involving maritime, interstate or foreign commerce.

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

Chapter 3 adopts the 1975 Inter-American Convention on International Arbitration ('Panama Convention'). Section 307 provides that the general provisions in Chapter 1 will apply only where they are not in conflict with the Panama Convention. Additionally, Section 305 holds that where both the New York and Panama Conventions apply to the enforcement of an arbitral award, if a majority of the parties to the agreement are citizens of a state or states that have ratified the Panama Convention, it will apply. Otherwise, the New York Convention will apply.

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

The UNCITRAL Model Law has not been enacted in the United States. However, eight states - California, Connecticut, Florida, Georgia, Illinois, Louisiana, Oregon and Texas - have enacted statutes based on the Model Law that apply in conjunction with the FAA.

The main differences between Chapter 1 of the FAA and the Model Law are summarised in the table below.

FAA	Model Law
9 USC ' 5 Unless otherwise stated in the arbitration agreement, upon the application of either party a United States court shall designate and appoint an arbitrator, and the arbitration will be conducted by a single arbitrator.	Article 10 (1) The parties are free to determine the number of arbitrators. (2) Failing such determination, the number of arbitrators shall be three. Article 11 (3)(a) in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two arbitrators thus appointed shall appoint the third arbitrator.
9 USC ' 11 A United States court may make an order modifying or correcting an arbitration award where: (a) there was an evident material miscalculation of figures or an evident material mistake (b) the arbitrators have awarded upon a matter not submitted to them, unless it is a matter not affecting the merits of the decision upon the matter submitted. (c) the award is imperfect in matter of form not affecting the merits of the controversy	Article 33 (1) Within thirty days of receipt of the award, unless another period of time has been agreed upon by the parties: (a) a party, with notice to the other party, may request the arbitral tribunal to correct in the award any errors in computation, any clerical or typographical errors or any errors of similar nature; (b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award. '
9 USC ' 10 A United States court can vacate an arbitration award, inter alia, where: (1) the award was procured by corruption, fraud, or undue means. (2) there was evident partiality or corruption in the arbitrators, or either of them. (3) the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced. (4) Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.	Article 34 An arbitral award may be set aside by the court specified in article 6 only if: (a) the party making the application furnishes proof that: (i) a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of this State; or (ii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; '

However, a number of issues which are addressed by the Model Law are not addressed by the FAA. These include:

• the availability of pre-action measures and relief from a court (but in connection with admiralty disputes, the FAA allows for arrest and similar procedures to be used, 9 U.S.C. ' 8);
• the ways in which an arbitrator's alleged impartiality can be challenged;
• the tribunal's power to appoint experts; 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 in the United States.

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

There is currently no legislative intention to amend the FAA. However, its provisions are frequently interpreted by the courts.

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

The FAA adopts the New York Convention in Chapter 2 (see 9 USC ' 201 et seq). However, there are two general reservations to the implementation of the New York Convention in the United States:

• The United States will only recognise awards made in another jurisdiction that has ratified the New York Convention; and
• The United States will only apply the New York Convention to matters recognised under domestic law as 'commercial'.

However, courts have given these reservations a narrow construction (see 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?

The FAA adopts the Panama Convention in Chapter 3 (see 9 USC ' 301 et seq). The United States has also signed and ratified the Washington Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (1965). Furthermore, the United States has numerous bilateral free trade agreements in force and is a party to 42 bilateral investment treaties. Importantly, these 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?

Two elements must be satisfied for it to be determined that a dispute is arbitrable in the United States:

• The parties must have entered into an arbitration agreement (for purposes of a United States seated arbitration) which states that arbitration is to be conducted in the United States; and
• The dispute that has arisen must fall within the terms of the arbitration agreement

The FAA requires federal district courts to stay judicial proceedings or compel arbitration if there is an agreement to arbitrate that encompasses their dispute: 9 U.S.C. ' 3, 4. However, the Act does not address whether, or when, the question of arbitrability should be decided by the arbitration panel rather than the court. A major issue, therefore, is 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)). The answer to this question will inform the parties as to whether the dispute over arbitrability is to be arbitrated or determined by a court.

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

The Federal Arbitration Act does not restrict the choice of seat based on the nature of the dispute. Parties are free to choose any seat of arbitration for the resolution of any dispute, without any legal...