The significant developments in US arbitration law during the past year highlight the continued attempts by US courts to strike a balance between enforcing the contractual provisions of arbitration clauses and protecting the efficiencies that are said to make arbitration an attractive dispute resolution method. Recent decisions by the US Supreme Court have spurred debate about how to ensure that the outcome of the arbitration process remains meaningful when faced with the costs individuals incur in litigating against large companies.
The continued viability of class actions in US litigation had been thought to have come to an end as a result of the Supreme Court’s decisions in Stolt-Nielsen and AT&T Mobility, but federal circuit courts of appeal continue to find ways to permit such actions. The possibility of government action to regulate arbitration clauses became closer to reality as the Consumer Financial Protection Bureau sought public comment for the first time on possible regulatory action in this area. A more comprehensive review of the Federal Arbitration Act (‘the FAA’) through proposed amendments in the Arbitration Fairness Act saw little progress, raising the likelihood that governmental intervention in the regulation of arbitration clauses would be incremental at best and would begin first in the area of consumer financial services agreements.
US appellate courts, for their part, issued several decisions in the past year on the recognition and enforcement of foreign arbitral awards. The courts were faced with the competing interests of enforcing a strong federal policy in favour of arbitration and respecting the US’s foreign policy of applying sanctions against certain foreign regimes. Challenges to final arbitration awards, however, have largely found little traction under the FAA and the New York Convention. Class action waivers were also a frequent topic before the federal courts, with the Second Circuit standing alone in finding a path for litigants to avoid such waivers.
The efficiencies of the arbitration process were also the focus of arbitral governing bodies, as the CPR International Institute for Conflict Prevention & Resolution issued guidelines for early disposition of cases. With costs rising in the arbitration process to the point of sometimes mirroring those incurred in court litigation, practitioners continue to seek out ways to streamline the arbitration process.