What is the difference between the Federal Arbitration Act and state arbitration law?
In the United States, the Federal Arbitration Act (FAA) and state arbitration laws are two different pieces of legislation governing arbitration. The FAA is a federal law passed in 1925 which was intended to promote the use of arbitration as an alternative dispute resolution method. The act gives an arbitration clause in a contract (called a “pre-dispute arbitration agreement”) the same enforceability as any other clause in a contract. State arbitration laws are laws passed by individual states that regulate arbitration within that particular state. These laws may override the FAA in certain circumstances, and they can also be more restrictive than the FAA. For example, some state arbitration laws may require that certain types of disputes be handled in a specific way or that an arbitration agreement must be in writing in order to be enforceable. The biggest difference between the FAA and state arbitration laws is that the FAA applies nationwide, while state laws only apply within their respective states. That means that if a state arbitration law is more restrictive than the FAA, then it can only be enforced within that state. If the dispute involves people from different states, then the FAA will apply.
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