Arbitration in the United States

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Securities arbitration

Timeliness and the Non-Existence of Arbitration Agreements[edit source]

Generally, a person who opposes an arbitration award must file a motion to vacate the award within three months of the date in which the award was either entered or delivered. However, it is by no means a settled legal matter whether or not this time limit applies when the person moving to vacate is challenging, not the award itself, but the very contractual obligation to arbitrate in the first place.

Some states, such as Texas, Washington, and Tennessee have held that the time limit does apply, even when you dispute the existence of an arbitration agreement in the first place. Texas is particularly consumer-unfriendly in this respect. In that state, not only does the time limit apply, no matter on what grounds you dispute the award, but even if you are within the three month time limit, "[t]he nonexistence of an arbitration agreement is not one of the grounds upon which an arbitration award may be vacated under the FAA," effectively allowing anyone in Texas to unilaterally file arbitrations against anyone else, contract or no contract, and the other party who did not want to arbitrate is left without recourse.

Missouri takes a slightly more consumer-friendly approach, but still largely favors proponents of arbitration. Missouri recognizes lack of an arbitration agreement as a grounds to vacate, but still requires the person seeking vacature to prove that there was no agreement to arbitrate, effectively requiring the opponent of arbitration to prove a negative.

The United States Court of Appeals for the First Circuit, however, has taken the opposite approach, and argued that the three month time limit is not triggered until there is an agreement to arbitrate. Arkansas has adopted the First Circuit's approach to the issue. However, neither of these cases specify whether or not the opponent to the arbitration has the burden of proof, like in Missouri.


Various bodies of rules have been developed that can be used for arbitration proceedings. The two most important are the UNCITRAL rules and the ICSID rules. The rules to be followed by the arbitrator are specified by the agreement establishing the arbitration.

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Done at New York, 10 June 1958; Entered into force, 7 June 1959; 330 U.N.T.S. 38, 1959) provides for the enforcement of foreign arbitral awards on the territory of the contracting parties. Similar provisions are contained in the earlier Convention on the Execution of Foreign Arbitral Awards (Done at Geneva, 26 September 1927; Entered into force, 25 July 1929; L.N.T.S. ???).

Some jurisdictions have instituted a limited grace period during which an arbitral decision may be appealed against, but after which there can be no appeal. In the case of arbitration under international law, a right of appeal does not in general exist, although one may be provided for by the arbitration agreement, provided a court exists capable of hearing the appeal.

When arbitration occurs under U.S. law, either party to an arbitration may appeal from the arbitrator's decision to a court, however the court will generally not change the arbitrator's findings of fact but will decide only whether the arbitrator was guilty of malfeasance, or whether the arbitrator exceeded the limits of his or her authority in the arbitral award or whether the award conflicts with positive law. The Supreme Court has described the standard of review as one of the narrowest known to Western jurisprudence. Wherever so seen, arbitration may be the best approach to the legal manners and parties involved.

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