Mr. Foerster is a student at the Law School of the University of California at Los Angeles. This article was his contribution to the Lucius Eastman Arbitration Library essay contest that was judged earlier this year.
Half a century ago. Judge Cardozo declared that the law of the forum state determined the enforceability of a commercial arbitration agreement in conflict-of-laws cases. Even though the agreement is made in other states, or is to be performed there, or if the parties reside in other states, Cardozo would ignore the laws of these relevant jurisdictions.
This paper will first examine the logical and legal bases of this rule. Afterwards, the views of Professors Heilman and Lorenzon and the modern conflicts theories of the Revised Restatement and Professor Currie will be evaluated. Finally, there will be a determination as to the rule that can best ascertain the law to govern the enforceability of the agreement.
I. A HYPOTHETICAL PROBLEM
A contract is made in California calling for the interstate shipment of goods. The contract contains an agreement to arbitrate all disputes in Idaho. Buyer brings suit in Oklahoma for breach, and Seller pleads the agreement as a bar to further judicial proceedings. Will the arbitration clause be enforced to bar the suit? Clearly, three states have an interest in this dispute. But which state's law will govern the enforceability is the dilemma with which the Oklahoma court must vwestle. If it looks to the California law, agreements to settle existing or future controversies before arbitral tribunals are "valid, enforceable, and irrevocable" under Section 1281 of the California Code of Civil Procedure.