Key Terms
Constitutional basis
The FAA operates under the broadest permissible exercise of congressional power under the Commerce Clause (Article I). T
Practical result
Mandatory arbitration clauses are enforceable for virtually any transaction involving interstate commerce, which is very
Process
Parties define the conflict and agree to an outcome, often through compromise.
Example
The Better Business Bureau trains its own arbitrators to hear B2C complaints.
Goal
Win-win outcome.
Confidentiality
Mediation discussions are not admissible in court. This encourages openness.
Binding result
If parties reach agreement, they often immediately enter into a legally binding contract embodying the terms. The mediat
Court-ordered mediation
Courts frequently require mediation as part of the litigation process, after discovery and before trial, to reduce docke
Mandatory arbitration
Parties must arbitrate because (1) they signed a contract requiring it for that type of dispute, or (2) state law requir
Voluntary arbitration
Parties agree to arbitrate because they believe it is better than litigation (faster, cheaper).
Courts review ONLY
1. Whether the award covered matters beyond the issues submitted 2.
FAIRNESS IN ARBITRATION
B2B vs. B2E vs.
ADR
Dispute resolution outside the judicial process.
Negotiation
Parties resolve the dispute themselves; no third party.
Mediation
Neutral third party (mediator) facilitates agreement; parties still decide.