Chapter Two: The FAA - Law and Practice of United States Arbitration - Sixth Edition
1. The Early ‘Hostility’
In the nineteenth century, U.S. courts, like their counterparts in other countries, were hostile to arbitration. In most legal systems, courts were unwilling to surrender or share their adjudicatory authority with mere merchants who lacked any real background in the law. They rejected as preposterous the idea that unqualified individuals could perform the task of adjudication. These judges also deemed arbitration to be a poor approximation of the judicial trial. Courts were unwilling to force parties to arbitrate, regardless of their written agreement to do so. In the words of Mr. Justice Story,
[w]hen [courts] are asked to...compel the parties to appoint arbitrators whose award shall be final, they necessarily pause to consider whether such tribunals possess adequate means of giving redress, and whether they have a right to compel a reluctant party to submit to such a tribunal, and to close against him the doors of the common courts of justice, provided by the government to protect rights and to redress wrongs.
Under U.S. law, legal validity was slow to reach the arbitration agreement. The contract to arbitrate disputes was not legally binding until the tribunal was ready to rule and the outcome of the litigation, for all intents and purposes, was known. Succinctly stated, the arbitration agreement became binding only once it had been performed. English courts reviewed the merits of awards through the case-stated procedure, while American courts expressed their distrust and suspicion of arbitration by making the arbitral clause subject to unilateral rescission until an award had been rendered. As with the merits review of awards under English law, the rule evidently compromised the appeal, effectiveness, functionality, and autonomy of arbitration.