What is the effect of the Federal Arbitration Act on arbitration agreements in federal courts?

• A. It prohibits arbitration in most federal cases.
• B. It supports enforcement of arbitration agreements and can compel arbitration and stay or dismiss proceedings.
• C. It has no effect on arbitration agreements in federal courts.
• D. It only applies to international arbitration and not domestic.

Answer: (B)

The Federal Arbitration Act creates a strong federal policy favoring arbitration and makes arbitration agreements in federal courts enforceable. When there is a valid arbitration agreement and the dispute falls within its scope, a federal court can compel arbitration. If a case has been filed in federal court on arbitrable claims, the court may stay the federal proceedings or dismiss them and order the parties to arbitrate. The FAA also supports enforcement of arbitration awards and can preempt conflicting state rules that would hinder arbitration. In short, it facilitates moving disputes into arbitration by enforcing arbitration agreements and providing the mechanisms to compel arbitration and pause or dismiss court proceedings as appropriate.