Originally from Employment Arbitration - 2nd Edition

The Law of Arbitration: Basic Concepts

Thomas E. Carbonneau

A number of concepts and legal doctrines appear in all legal regulations of arbitration. Understanding these basic notions is essential to the evaluation of arbitral agreements, arbitral proceedings, and judicial decision-making regarding the arbitral process.

(i) Party Autonomy

The primary rule that governs the law, practice, and regulation of arbitration in the vast majority of national jurisdictions, including the United States, is the principle of freedom of contract. In Volt Information Sciences, Inc. v. Leland Stanford Junior University, for example, the U.S. Supreme Court held that:

…[t]he FAA does not require parties to arbitrate when they have not agreed to do so…nor does it prevent parties who do agree to arbitrate from excluding certain claims from the scope of their arbitration agreement….It simply requires courts to enforce privately negotiated agreements to arbitrate, like other contracts, in accordance with their terms….Arbitration under the Act is a matter of consent, not coercion, and parties are generally free to structure their arbitration agreements as they see fit….

In effect, freedom of contract allows the parties to write their own rules of arbitration—to have the agreement establish the law of arbitration for the parties’ particular transaction. The parties, therefore, can customize the arbitral process to the needs of their transaction, eliminate legal rules or trial techniques that might prove inconvenient or unsuitable, and incorporate procedural elements they believe essential to the fairness, finality, and functionality of the process.