Countless arbitration agreements are concluded every day in the United States. These agreements, and the arbitral process, play a vitally important role in contemporary American life, providing an efficient, expert, and enforceable means of dispute resolution in a wide range of commercial and other settings. It is therefore remarkable that a number of state court decisions have adopted a largely unnoticed position that, if followed elsewhere, would pose a serious threat to the use of arbitration in the United States. These decisions frustrate the central purposes of arbitration agreements and violate both the Federal Arbitration Act (“FAA”) and the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”).
As discussed in Part I of this article, a number of U.S. state courts have held that statutes of limitations do not apply in arbitration. Although there are a few contrary decisions, courts in California, Minnesota, Maine, North Carolina, Connecticut and elsewhere have interpreted state statutes of limitations as applicable only to “actions” or “suits” in state courts, and not in arbitration. Decisions of a few federal courts have adopted the same position, holding that particular statutes of limitations do not apply in arbitration.