Originally from The College of Commercial Arbitrators Guide to Best Practices in Commercial Arbitration, Fifth Edition

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  The publication of this edition of The College of Commercial Arbitrators Guide to Best Practices in Commercial Arbitration coincides with the 100-year anniversary of the Federal Arbitration Act.  Commercial arbitration has come a long way in that interval, achieving a settled place in the world of dispute resolution.  Before the FAA, many courts viewed private arbitration proceedings as a threat to their jurisdiction and refused to enforce agreements to arbitrate.  Following its enactment, courts have uniformly embraced it. The FAA’s assurance that arbitration agreements are enforceable, subject only to statutory exceptions and general principles that apply to any contract, is the foundation for the rich landscape of commercial arbitration in the United States today. Businesses and individuals employ arbitration extensively in virtually every field of commerce, including financial services, investments, real estate sales  and development, construction projects, contracts for goods and services, public works and procurement, oil & gas/energy, health care, intellectual property, insurance and reinsurance, franchising, mergers and acquisitions, entertainment, telecommunications, international business, and investor-state transactions. Moreover, arbitrations are no longer confined to breaches of commercial contracts, but now often include claims of tortious conduct and statutory violations.

   Commercial disputes that a few decades ago would have been resolved in protracted court proceedings are increasingly determined by private arbitrators selected and paid by the parties. Such arbitrators often devote all or a substantial part of their professional life to arbitration. Legislatures and courts have strongly supported arbitration as it has spread. They have given arbitrators wide latitude in managing the process. Courts do not second-guess arbitral decisions, absent signs that the process has been fundamentally unfair. That few awards are vacated indicates that such misbehavior is, fortunately, rare in arbitration. There are, of course, many reasons for commercial arbitration’s popularity as an alternative to litigation.  Parties to commercial contracts often prefer to have their disputes resolved by arbitration because beyond saving time and expense, they want (1) to select the decision maker with expertise in the subject matter of their dispute; (2) to select the time, frequency, format and venue of the evidentiary hearing; (3)  to obtain expedited consideration and resolution of their claims and defenses in a private forum; (4)  to achieve reasonably prompt finality after all sides have a full and fair hearing; (5) to limit or expand the range of remedies; and (6) to control the precedential or collateral estoppel effect of an adverse decision.