New Wineskins for New Wine: The Need to Encourage Fairness in Mandatory Arbitration

When the Federal Arbitration Act (“FAA”) was passed in 1925, it constituted an
important Congressional endorsement of arbitration as an alternative to
litigation in court and a major departure from previous practice. Specifically,
the FAA made it possible for parties to enforce their arbitration agreements by
orders of specific performance. While it broke new ground, the FAA was limited
in its goals and ambitions. It did not, for example, oust the states from their role in
regulating arbitration agreements, nor was it understood to extend to contracts to
arbitrate either civil rights claims or claims arising out of employment relations.
Beginning in 1985, the Supreme Court began radically reinterpreting the FAA.
The Court announced an “emphatic federal policy in favor of arbitral dispute
resolution” and has proceeded in furtherance of that federal policy to embrace
contractually based arbitration as a solution to a myriad of ills from overcrowded
dockets to international sensitivities. The Court has upheld these agreements when
imposed as a condition of employment and in adhesive consumer contracts. It has
enforced them not only with regard to common law causes of action, but also as to
statutorily based civil rights claims. Finally, it has taken from the states the
authority to regulate these agreements except on such grounds as would apply to all
contracts. The process of pouring the new wine of enthusiasm for alternative
dispute resolution into this sixty year old wineskin has predictably produced a
mess.