This is an extract of our Arbitration document, which we sell as part of our Complex Litigation Outlines collection written by the top tier of Georgetown University Law Center students.
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Arbitration a. In General i. Pursuant to Section 2 of the Federal Arbitration Act ("FAA"), an arbitration clause in a commercial contract "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." (CB 668).
1. Section 2 of the FAA reflects both a "liberal federal policy favoring arbitration" and the "fundamental principle that arbitration is a matter of contract." Concepcion (CB 680).
2. "[C]ourts must place arbitration agreements on equal footing with other contracts, . . . and enforce them according to their terms." Concepcion (CB 680).
3. The final phrase of Section 2, the savings clause, permits agreements to arbitrate to be invalidated by "generally applicable contract defenses, such as fraud, duress, or unconscionability," but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue. Concepcion (CB 680). ii. Enforcement Mechanisms:
1. Section 3 of the FAA requires a federal court to stay its proceedings in favor of arbitration if a party requests it.
2. Section 4 of the FAA allows a party to obtain an order from a federal court compelling arbitration. iii. In upholding arbitration clauses generally under the FAA, the Supreme Court has repeatedly stated that "[b]y agreeing to arbitrate a statutory claim, a party does not forego the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than judicial, forum. It trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration." Mitsubishi (CB 674). iv. The FAA is preemptive federal substantive law that applies in both state and federal courts to the
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