The Intersection Of Arbitration And Choice-Of-Law Clauses

Law360, New York (December 4, 2017, 4:28 PM EST) -- Clients on the verge of litigation with a contractual counterparty often furnish their attorneys with the parties’ extensively negotiated contract containing both a mandatory arbitration provision and a choice-of-law clause. While such provisions are useful in eliminating the typical prelitigation uncertainties regarding where to file suit and which state’s law will apply, an often overlooked question is whether the Federal Arbitration Act (“FAA”) or the parties’ chosen law governs the arbitration itself.

Practitioners, arbitrators and parties may erroneously assume that the contract’s chosen state law will govern all issues, substantive or procedural. Instead, the FAA, where applicable, preempts choice-of-law designations unless...

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