What is the Federal Arbitration Act?

The Federal Arbitration Act (FAA) is a United States federal law that governs the enforcement of arbitration agreements in commercial contracts. This law was enacted in 1925 to protect against the lawsuits that had begun to plague businesses and protect parties to a contract from prolonged litigation. The FAA is the primary source of law governing arbitration agreements in contracts throughout the United States, including Delaware. The FAA states that an arbitration agreement is legally enforceable, meaning both parties are legally bound by it and must follow the terms of the agreement. The FAA also authorizes the courts to enforce arbitration agreements and compel parties to arbitrate a dispute when one party has refused to do so. This means that, if one party has refused to comply with the terms of the arbitration agreement, the other party can take them to court and require them to resolve the dispute through arbitration. The FAA also prevents parties from using the court process to challenge the validity of an arbitration agreement. This means that, even if one party believes the arbitration agreement to be invalid, they cannot go to court to try to invalidate it. The FAA requires parties to resolve disputes in accordance with the terms of the arbitration agreement they have entered into instead. In short, the Federal Arbitration Act is a law that governs the enforcement of arbitration agreements in contracts across the United States, including Delaware. It requires parties to a contract to follow the terms of the agreement when arbitrating a dispute, forbids parties from using courts to challenge the validity of an agreement, and compels parties to arbitrate if one party has refused to do so.

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