The Arbitration Exception

AuthorErnesto Sanchez
International arbitration, as Chapter 9 described, has become a popular mode of cross-border
dispute resolution because it enables parties to transactions or other legal relationships to avoid
national court systems and plan their own way of resolving disputes that might arise from those
transactions or relationships.1 Further encouraging the use of arbitration by parties connected
to the United States is the U.S. Federal Arbitration Act (FAA), enacted in 1925, which pro-
vides for and governs the judicial facilitation of domestic and international arbitration.2 Acting
on U.S. law’s generally favorable disposition to this form of dispute resolution that the FAA
reects, the U.S. Supreme Court has long acknowledged arbitration’s importance to interna-
tional commerce, asserting that an insistence that “all disputes . . . be resolved under our laws
and in our courts” would hinder U.S. businesses’ foreign expansion and that advance agreement
“on a forum acceptable to both parties is an indispensable element in international trade, com-
merce, and contracting.”3 e FSIA accordingly denies the defendants it covers immunity from
subject matter jurisdiction where plaintis le an action in U.S. courts to enforce an arbitration
agreement or conrm an arbitral award.
A foreign state shall not be immune from the jurisdiction of courts of the United States or
of the States in any case . . . in which the action is brought, either to enforce an agreement
made by the foreign state with or for the benet of a private party to submit to arbitra-
tion all or any dierences which have arisen or which may arise between the parties with
respect to a dened legal relationship, whether contractual or not, concerning a subject
matter capable of settlement by arbitration under the laws of the United States, or to
conrm an award made pursuant to such an agreement to arbitrate, if (A) the arbitration
takes place or is intended to take place in the United States, (B) the agreement or award
is or may be governed by a treaty or other international agreement in force for the United
States calling for the recognition and enforcement of arbitral awards, (C) the underlying
claim, save for the agreement to arbitrate, could have been brought in a United States
court under this section or section 1607 [the counterclaim exception], or (D) paragraph
(1) of this subsection [i.e., the waiver exception] is otherwise applicable.4
1. See supra Pt. III, Ch. 9, § 9.3(2)(B)(I).
2. See 9 U.S.C. §§ 1-16, 201-208, 301-307; Moses H. Cone Memorial Hospital v. Mercury Construction Corp.,
460 U.S.1, 24 (1983) (stating that FAA establishes a “body of federal substantive law of arbitrability, applicable to any
arbitration agreement within the coverage of the Act.”).
3. Bremen v. Zapata O-Shore Co., 407 U.S. 1, 8-9 (1972).
ForSovImmunAct_book.indb 179 4/11/13 3:32 PM

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