Originally from Dispute Resolution Journal

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The U.S. Supreme Court holds that parties to an international arbitration agreement have virtually complete control over the terms of their agreement. However, in the absence of party-created parameters, U.S. law specifies certain rules—taken from the New York Convention and the United States Arbitration Act— that apply to the interpretation and enforcement of international agreements.

The United States Supreme Court repeatedly has declared that parties to an arbitration agreement have virtually unfettered control over the terms of that agreement, and that U.S. courts are to enforce arbitration agreements to effectuate the intention of the parties. Absent terms by the parties that specify otherwise, however, U.S. law specifies certain rules and presumptions that apply to the interpretation and enforcement of international arbitration agreements, and that are generally in favor of expansive interpretation and enforcement.

The applicable U.S. law derives from two sources:
• The Convention on the Recognition and Enforcement of Foreign Arbitral Awards1 (the Convention) was drafted to facilitate enforcement of international arbitration agreements and awards. On June 10, 1958, 10 nations, not including the U.S., signed the Convention.2 The Convention entered into force for the United States on December 29, 1970. Currently, 111 nations are parties to the Convention.
• Chapter 2 of the United States Arbitration Act (USAA)3 was enacted in 1970 to implement the Convention in the United States. Chapter 1 of the USAA had been enacted in 19254 to facilitate enforcement of domestic arbitration agreements and awards. Chapter 1 of the USAA also applies to actions and proceedings brought under chapter 2 to enforce the Convention to the extent that chapter 1 “is not in conflict with [chapter 2] or the Convention…”5

The Convention and its implementing legislation govern enforcement in U.S. federal and state courts of arbitration agreements that meet the following prerequisites: First, there must be an agreement in writing to arbitrate the subject of the dispute. Absent agreement otherwise by the parties, U.S. federal law provides that (1) the court, rather than the arbitrator, will decide both whether the parties entered into any arbitration agreement at all, and whether the wording of the parties’ agreement encompasses the dispute at hand; and (2) ordinary U.S. state-law governs whether the parties entered into any arbitration agreement at all, but U.S. federal law governs whether the parties’ agreement to arbitrate encompasses the dispute at hand. Second, the agreement must provide for arbitration in the territory of a signatory of the Convention. Third, the agreement must arise out of a legal relationship, whether contractual or not, which is considered commercial. Fourth, either a party to the agreement must not be a U.S. citizen, or the commercial relationship must have some reasonable relationship with one or more foreign states. Such arbitration agreements governed by the Convention and its implementing legislation will be referred to in this article simply as “international arbitration agreements.”