Arbitration case law in the United States

Arbitration in the United States is governed by the Federal Arbitration Act of 1925 (FAA, codified at 9 U.S.C. 1 et seq.), which requires courts to compel parties who agree to arbitration to participate in binding arbitration, the decision from which is binding upon the parties. Since the passage of the FAA, both state and federal courts have examined arbitration clauses, as well as other statutes involving arbitration clauses, for validity and enforceability.

Federal courts

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State courts

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  • Discover Bank v. Superior Court (113 P. 3d 1100 (Cal. 2005)): Held a class action waiver in an arbitration clause unconscionable when disputes will involve small amounts of damages and are part of a scheme by a company with superior bargaining power to deliberately cheat many consumers (the "Discover Bank test").[4]

References

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  1. ^ Mont. Code Ann. §27-5—114(4), qtd. in 517 U.S. at 684
  2. ^ 517 U.S. at 687
  3. ^ 531 U.S. at 91
  4. ^ 30 Cal. Rptr. 3d at 87