The Arbitration Exception

• Author: Ernesto Sanchez
• Pages: 179-192

179

THE A RB IT R AT IO N EX CE P T IO N

§ 14.1 INTRODUCTION

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.

§ 14.2 PERTINENT STATUTORY TEXT

28 U.S.C.§ 1605(a)(6) states:

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).

4. 28 U.S.C. § 1605(a)(6).

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