III.

Commercial Arbitration

In the U.S., commercial arbitration is used most often in the construction, garment, and textile industries; in cases involving insurance and negligence; in maritime disputes; and in controversies involving members of stock and commodity exchanges. Most states have adopted modern arbitration statutes, and since 1925 the Federal Arbitration Act has governed arbitration of grievances arising out of maritime transactions and transactions in interstate or foreign commerce. These statutes provide that agreements may be made to arbitrate future as well as existing disputes; that the courts will not hear disputes subject to valid agreements to arbitrate; and that arbitral awards may be enforced in the courts. Such awards generally may be set aside only because of misconduct (such as an undisclosed conflict of interest) by an arbitrator. Agreements to arbitrate usually are contained in the arbitration clause of a contract; the Supreme Court has held that if there is a dispute about the validity or effectiveness of a contract containing such a clause, it is for the arbitrators—not the courts—to decide the issue.

Commercial arbitrators include business executives, lawyers, and other professionals who, as a public service, are willing to help resolve conflicts in their areas of expertise. In simple cases, a single arbitrator may hear a dispute; in cases in which the issues are complicated or the amount in dispute is substantial, it is common to provide for a panel of three arbitrators. Arbitrations are often conducted under the auspices of the American Arbitration Association or a specialized trade association.

See also International Labor Organization; Labor, Department of; Labor Relations.