2013 is shaping up to be the year that that party ended for state evasion of the Federal Arbitration Act. States have traditionally relied on a number of stratagems to avoid the preemptive force of the FAA’s “liberal federal policy favoring arbitration.” (Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 ). One was to hide behind the FAA’s “savings clause,” which permits states to refuse to enforce arbitration agreements on “such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The savings clause preserves generic contract defenses such as fraud, duress or unconscionability, and ensures that they are not preempted. States made liberal use of the savings clause to avoid the FAA’s enforcement mandate by deploying a veneer to generality to save rules aimed at limiting the enforcement of arbitration agreements.
Continue Reading 9th Inning, Two Outs, None On for California State Courts That Ignore Federal Arbitration Act