Latest News

Examining the Intersection of Agency Deference and Arbitration Jurisprudence

Examining the Intersection of Agency Deference and Arbitration Jurisprudence

The U.S. Supreme Court heard three merged cases regarding employee class actions and forced arbitration in May 2018. The question in the case Epic Systems Corp. v. Lewis was whether class-action waivers in employment contracts violated employees' rights to collective action under the National Labour Relations Act (NLRA) or were enforceable under the Federal Arbitration Act (FAA). The Court established a channel of communication between agency deference and arbitration theory. Chevron, U.S.A., Inc. v. Natural Resources Defence Council, Inc. establishes certain circumstances in which a court must grant an agency's reasonable and authorized interpretation of unclear substantive legislation in the context of administrative deference. McMahon's default would seem to encourage arbitration in the event of a disagreement between the FAA and another legislation, but Epic Systems did not provide clear guidelines for administrative control of arbitration. Since agencies have traditionally used their broad regulatory jurisdiction to establish arbitration rules and the Supreme Court has always supported these delegations of authority, the proper judicial treatment of agency regulation of arbitration would be strictly academic. There is no comprehensive list of the many sets of agency rules in this field, nor a historical description of arbitration regulations. More academic attention should be paid to the relationship between agency-deference jurisprudence and arbitration case law in the aftermath of Epic Systems. It is not appropriate to write off agency arbitration rules as a fad that conflicts with established arbitration rulings.

Though the Federal Arbitration Act (FAA) was passed to give arbitration agreements legal standing, the Supreme Court elevated it to the status of a quasi-constitutional provision that supersedes all other federal statutes. Following English common law, federal and state courts first declined to uphold arbitration agreements. However, in the 1920s, a few states passed unified arbitration legislation, which altered the revocability rule and promoted the use of arbitration. A federal arbitration measure based on the New York Act was pushed for by more than 120 organizations, led by the American Bar Association and the U.S. Chamber of Commerce. For arbitration agreements to be upheld in federal court, Congress has to step in. Arbitration agreements are considered binding, legitimate, and irreversible unless they are grounds for contract revocation, according to the 1925 FAA. The Supreme Court dramatically altered this language's meaning throughout time.

Federal courts first viewed the Federal Arbitration Act (FAA) with scepticism, but the Supreme Court eventually elevated it to the status of a semi-constitutional standard. The FAA expanded its scope beyond admiralty claims and inter-merchant contract disputes, becoming a substantive statute enforceable against states and establishing a liberal federal policy favouring arbitration over federal and state statutory rights. The FAA's authority as a trump card was increased by the Court's rulings, which changed it from a procedural to a substantive legislation that applied to states. The FAA's purview was widened, including arbitration of a limited range of legal issues, including admiralty and intermerchant contract disputes. Congress presumably intended to provide arbitration for a limited range of legal issues, including admiralty and inter-merchant contract disputes, based on legislative history. Whenever legislation attempts to "conjure conflicts" with the FAA, the Court has consistently decided in favour of arbitration. This amazing evolution of the FAA has been interpreted by the regulatory state, except independent transportation contractors who are not subject to the law.

It is puzzling that legal study pays so little attention to administrative rules governing arbitration processes. Although some academics have proposed moving the emphasis from the courts to federal administrative bodies, this is predicated on the false belief that these organizations are novices in the realm of arbitration. However agencies have been controlling arbitration for many years, and more than thirty years ago, the Supreme Court approved this administrative power. This Section presents a set of administrative arbitration rules to solve the primary weakness in this emerging scholarly discussion. As long as the legislation is unclear and the agency's interpretation of its substantive statute is appropriate and legal, it is permitted for the agency to govern arbitration processes. This might be achieved without rendering any arbitration regulations made by an agency's broad rulemaking authority illogical or unlawful by harmonizing the agency's deference and arbitration jurisprudence. The arbitration case law and the agency-deference jurisprudence are not incompatible by any means. McMahon depends on the authority of an agency to control arbitration, and several agencies have been publicly overseeing arbitration for many years. This emphasizes the necessity of starting a serious discussion about how agency deference and arbitration interact.


[1] Sararu, Catalin-Silviu. "Arbitration settlement of disputes concerning administrative contracts in Romania." Tribuna Juridic? 8. Special (2018): 223-227.

[2] Juntama, Eakasit. "Principle of the Autonomy of Arbitration Agreement in Administrative Contracts: Lesson from the Case of the Klong Dan Wastewater Treatment..." Naresuan University Law Journal 9.2 (2016): 45-65.

[3] Godi, Matteo. "Administrative Regulation of Arbitration." Yale J. on Reg. 36 (2019): 853.

[4] Al-Shibli, Farouq Saber. "The disputes of administrative contracts: The possibility of using arbitration according to the Jordanian Arbitration Act 2001." J. Legal Ethical & Regul. Issues 21 (2018): 1.


  • Supreme Court's ruling on class-action waivers and forced arbitration in employment contracts.
  • Evolution of the Federal Arbitration Act (FAA) from procedural to substantive legislation.
  • Lack of academic attention to administrative rules governing arbitration processes.

BY : Vaishnavi Rastogi

All Latest News