Academic journal article Texas International Law Journal

State International Arbitration Statutes: Why They Matter

Academic journal article Texas International Law Journal

State International Arbitration Statutes: Why They Matter

Article excerpt

A significant number of states have enacted international arbitration acts in the hope of attracting international arbitration business. These acts, which tend to be modeled on the UNCITRAL Model Law on International Commercial Arbitration, seem to fly in the face of the FAA [Federal Arbitration Act] and the [US.-adopted international] Conventions .... [I]t is, with one exception, difficult to think of any situation in which either or both of the domestic and the international FAA would not supersede any state international arbitration act. 1

I. INTRODUCTION

This statement, in one of the leading treatises on American arbitration law, represents the prevailing attitude of most commentators on the recent phenomenon of state international arbitration statutes. Of the few writers who have looked at these recent laws, those who do not dismiss the acts as entirely superfluous due to federal preemption tend to condemn the state statutes for merely adding another layer of confusion to an area of the law that is already ill-defined and verging on the inscrutable. 2 A complete vacuum of case law relating to these statutes compounds the problems inherent in speculating on how federal or state courts would handle the unresolved jurisdictional questions raised by the existence of these acts and their unique substantive content. 3 Many arbitration commentators have historically had a difficult time predicting how the Supreme Court would rule on state-federal issues. This difficulty is demonstrated by the literature surrounding both the Vol t4 and Mastrobuono 5 decisions. When researching in this area, it seems advisable to give limited credence to only the most recent of often conflicting articles due to frequent upheavals of the accepted wisdom.

Yet commentators who dismiss this state trend in legislation may be guilty of the same unexamined generalizations and shallow thinking as the state lawmakers and bar groups who pushed for and eventually adopted these international arbitration laws without much consideration of their effects on actual parties, proceedings, and courts. By simply pointing to the Supremacy Clause 6 and crying "preemption," these writers are underestimating the interstitial nature of federal arbitration law, the ascendancy of choice of law clauses and state party autonomy, and the federal common law practice of using an existing state law to fill gaps in a federal scheme.

This Comment will attempt to bring more specificity into the arena by closely examining the procedural and substantive implications of state international arbitration statutes: their rise and intent, their context, and finally their role and probable effect on the complex matrix that constitutes U.S. arbitration law. A more nuanced examination of the complicated interaction between the many sources of law involved-the international arbitration treaties legislatively incorporated into U.S. law, 7 the Federal Arbitration Acts (FAA) and its federal common law emanations, and the states' common law of contracts and their arbitration codes-indicates that these state international statutes, while still subordinate to any conflicting federal law, may still have a measurable impact on international arbitrations in the United States. In addition, recent Supreme Court decisions favoring party autonomy and pro-arbitration state law in the Volt, 9 Mastrobuono,10 and Allied-Bruce Terminix 11 cases suggest that those who disparage these statutes as insignificant will miss a potentially important ingredient in the mix of U.S. law applying to international arbitrations. A full understanding of these state international laws begins with an examination of their origins and characteristics.

II. STATE INTERNATIONAL ARBITRATION STATUTES: PROCEDURAL OXYMORONS?

A. Intent & History

The phenomenon of state international arbitration statutes began in 1988 with the enactment of the Florida International Arbitration Act. …

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