SEC. [13] 12. That notice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is filed or delivered. If the adverse party is a resident of the district within which the award was made, such service shall be made upon the adverse party or his attorney as prescribed by law for service of notice of motion in an action in the same court. If the adverse party shall be a non-resident, then the notice of the application shall be served by the marshal of any district within which the adverse party may be found in like manner as other process of the court. For the purposes of the motion any judge who might make an order to stay the proceedings in an action brought in the same court may make an order, to be served with the notice of motion, staying the proceedings of the adverse party to enforce the award. [SEC. 14. That upon the granting of an order confirming, modifying, or correcting an award, judgment may be entered in conformity therewith, no exceptions shall be taken, but an appeal may be taken from such order or judgment, as hereinafter set forth.] SEC. [15] 13. That the party moving for an order confirming, modifying, or cor. recting an award shall, at the time such order is filed with the clerk for the entry of judgment thereon, also file the following papers with the clerk: (a) The agreement; the selection or appointment, if any, of an additional abitratrator or umpire; and each written extension of the time, if any, within which to make the award. (b) The award. (c) Each notice, affidavit, or other paper used upon an application to confirm, modify, or correct the award, and a copy of each order of the court upon such an application. The judgment shall be docketed as if it was rendered in an action. The judgment so entered shall have the same force and effect, in all respects, as, and be subject to all the provisions of law relating to, a judgment in an action; and it may be enforced as if it had been rendered in an action in the court in which it is entered. [SEC. 16. That an appeal may be taken from an order vacating an award or from a judgment entered upon an award as from an order or judgment in an action.] That this Act may be referred to as "The United States Arbi SEC. [17] 14. tration Act." SEC. [18] 15. That all Acts and parts of Acts inconsistent with this Act are hereby repealed, and this Act shall take effect on and after the 1st day of January next after its enactment, but shall not apply to contracts made prior to the taking effect of this Act. Appendix "G” PARTIAL LIST OF ORGANIZATIONS SPONSORING THE FEDERAL ARBITRATION LAW 1 The Western Fruit Jobbers' Association of America. 2 National Wholesale Grocers' Association.. 3 San Francisco Chamber of Commerce. 4 Musical Supply Association 5 Babson Institute . Chicago, Ill. 6 Sun Maid Raisin Growers (formerly California Association Raisin Co.) National Poultry, Butter & Egg Association. 8 Chamber of Commerce of Kansas City.. 9 California Peach & Fig Growers.. 10 Canners' League of California 11 Music Publishers' Protective Association 12 Lake Charles Association of Commerce. 13 Amer. Chamber of Commerce of Philippine Islands. 14 North American Fruit Exchange 15 Atlantic Fruit Co. 16 Live Poultry & Dairy Shippers' Traffic Association.. 17 Yakima Fruit Growers' Association 18 Fruit Dispatch Co. 19 American Fruit Growers 20 California Packing Corporation 21 Chamber of Commerce of the State of New York. 22 Los Angeles Chamber of Commerce 23 N. Y. Board of Trade and Transportation. 24 National League of Commission Merchants of U. S. 25 Converters' Association 26 Philadelphia Association of Credit Men.. 27 Philadelphia Chamber of Commerce 28 Rochester Association of Credit Men.. 29 Broadway Board of Trade 30 National Association of Credit Men 31 Crockery Board of Trade of New York. 32 Arbitration Society of America 33 International Apple Shippers' Association. 34 American Manufacturers' Export Association. . Fresno, Cal. San Francisco, Cal. . Manila, P. I. י 35 Central Mercantile Association .New York, N. Y. 36 Building Trades Employers' Association of the City of New York 37 Federated Fruit & Vegetable Growers, Inc. (Co-operative, non-profit-National Sales Service). 38 The American Bankers Association 39 Music Industries Chamber of Commerce. 40 American Exporters' & Importers' Association. 41 The Merchants' Association of New York. 42 Tri-Boro Chamber of Commerce... 43 Baton Rouge Chamber of Commerce 44 Merchants' and Mfrs. Association of Baltimore. 45 N. Y. Coffee and Sugar Exchange, Inc.. 46 N. Y. State Forestry Association, Inc.. 47 American Fruit and Vegetable Shippers' Association. 48 San Antonio Chamber of Commerce 49 New Orleans Association of Commerce.. 50 Commercial Law League of America 51 New Jersey State Chamber of Commerce.. 52 The Albany Chamber of Commerce 53 Chamber of Commerce Haywood County.. 54 Portsmouth Chamber of Commerce. 55 Chamber of Commerce and Business Men's Club. 56 The Atlanta Chamber of Commerce. 57 The Chamber of Commerce 58 Hudson County Typothetae New York, N. Y. New York, N. Y. .San Antonio, Tex. 59 Association of Commerce (for Jackson and Madison County) Jackson, Tenn. 60 Chamber of Commerce of Michigan City.. 61 The Rotary Club of Newark, N. J.. 62 Massachusetts State Chamber of Commerce. 63 Winsted Chamber of Commerce 64 New Brunswick Board of Trade.. 65 Chamber of Commerce 66 New Jersey Lumbermen's Association.. 67 Chamber of Commerce 68 Chamber of Commerce 69 Bradford Board of Commerce 70 Sheridan Commercial Club 71 Manistee Board of Commerce 72 Brooklyn Chamber of Commerce 73 Grant County Chamber of Commerce. 74 Cincinnati Chamber of Commerce 75 The Produce Club of Chicago 76 Oklahoma City Chamber of Commerce. 77 The U. & I. Club of Detroit 78 Parkersburg Board of Commerce 79 Grand Rapids Fresh Fruit & Vegetable Jobbers. 80 Mobile Chamber of Commerce.. 81 Philadelphia Board of Trade 82 Chamber of Commerce 83 Philadelphia Maritime Exchange 84 Chamber of Commerce 85 Board of Trade 86 Chamber of Commerce 87 Kiwanas Club of Butte 88 Butte Association of Credit Men 89 Butte Rotary Club 90 Spokane Merchants' Association 91 Helena Commercial Club 92 Southern Arizona Traffic Association 93 Kiwanas Club of San Antonio 94 Cass County Chamber of Commerce. 100 Minneapolis Civic and Commerce Association 102 Chamber of Commerce 103 Evansville Chamber of Commerce 104 Silk Association of America 105 Rotary Club of Lafayette 106 Cleveland Chamber of Commerce 107 Jonesboro Chamber of Commerce 109 San Antonio Wholesale Credit Men's Association.. .Michigan City, Ind. .Boston, Mass. New Brunswick, N. J. .Houston, Texas .Nashville, Tenn. .Bradford, Pa. .Sheridan, Wyo. Manistee, Mich. .Brooklyn, N. Y Silver City, N. M. .Cincinnati, Ohio .Chicago, Ill. Oklahoma City, Okla. .Grand Rapids, Mich. San Antonio, Texas 1 114 Sioux City Chamber of Commerce 115 National American Wholesale Lumber Association. 116 Knoxville Board of Commerce 117 Lincoln Chamber of Commerce 118 Greater Burlington Association 119 Chamber of Commerce 120 New Haven Chamber of Commerce. 121 Arizona Wholesale Produce Association 122 American Farm Bureau Federation... Appendix "H" Sioux City, Iowa .New York, N. Y. ..Knoxville, Tenn. ..Lincoln, Neb. .Burlington, Iowa St. Joseph, Mo. New Haven, Conn. . Douglas, Ariz. .Washington, D. C. ANALYSIS OF UNITED STATES ARBITRATION ACT Speaking in general terms, the act provides that written clauses providing for arbitration of future disputes contained in any contract relating to maritime transactions (i. e., matters which would normally be embraced in admiralty jurisdiction) or involving interstate commerce shall be valid, irrevocable and enforceable except on the grounds for which any contract may be revoked. The same rules apply to a submission to arbitration of a controversy already existing. There are excepted from the operation of the statute, however, contracts for the employment of seamen, railroad employees and other workers in foreign and interstate commerce. In addition to the declaration of the validity and enforceability of arbitration agreements within these two fields, the Federal courts are given jurisdiction to enforce agreements for arbitration or submissions and a procedure is established by which such enforcement can be had summarily. The jurisdiction exists in those cases in which, under the Judicial Code, the Federal courts would normally have jurisdiction of the controversy between the parties. The right of a party to libel a vessel or other property at the commencement of the proceeding, in cases otherwise justiciable in admiralty, is preserved so that this important preliminary safeguard is not lost by an agreement to arbitrate. There are two possible steps in the enforcement of the agreement. In the first place, any suit commenced in a Federal court upon an issue referable to arbitration may be stayed until arbitration is had, providing the applicant for the stay is not in default with the arbitration. In the second place, the court may order the arbitration to proceed pursuant to the agreement, appointing an arbitrator itself if ap pointment under the agreement cannot be had. The provisions for enforcing the agreement assure a prompt, speedy and nontechnical determination of the merits both of the application for enforcement and of the matter in controversy. The proceeding is commenced by a petition to the Federal court which, except for the agreement, would have jurisdiction of the subject matter of the controversy, seeking an order directing that the arbitration proceed in accordance with the agreement. Only five days' notice of the application is required, but service is to be made in the manner provided for service of a summons in that jurisdiction. If there is a dispute as to the existence of the agreement for arbitration or as to its performance, the court shall determine that dispute forthwith. A jury trial of the issue may be demanded, except in admiralty, and the issues are then to be submitted to a jury as though they were issues in an equity action, or a jury may be specially called. If no jury is demanded or if the case is one of admiralty, the court is to decide the question summarily. Upon decision either by the court or the jury that the agreement or submission was made and that there is a default, the court will issue an order summarily directing the parties to proceed with the arbitration in accordance with the terms of the agreement, except that the proceedings must be within the district in which the petition for the order is filed. The court is empowered to appoint an arbitrator or arbitrators, if necessary. The entire proceeding, except as to determination of the existence of the agreement, is to be heard as though it were a motion. arbitrators have the power to secure the attendance of witnesses and to bring before them any papers which they need. The any The The parties may agree that a judgment of the court shall be entered on award. They may specify the court, but if none is specified then the application shall be made to the court for the district in which the award was made. judgment is secured by an application to confirm the award, which must be granted unless the award is vacated, modified or corrected. The award shall be vacated was procured by corruption, fraud or undue means or there was only when it evident partiality or corruption on the part of the arbitrators, or they were guilty of certain misconduct or they exceeded or imperfectly executed their powers in certain respects specified. Resubmission may be directed in such a case, if the time Jmited for the award has not expired. The award may be modified or corrected for an evident material miscalculation or mistake in description, or where the arbitrators have awarded on a matter not submitted to them, but not affecting the merits of the decision on the matters submitted, or where the award is imperfect in form without affecting the merits of the controversy. Proceedings to confirm are to be brought within one year after the award is made; to vacate, modify or correct within three months after it is delivered. The proceeding is commenced by an appli cation to be served on the adverse party or his attorney as though it were service of a notice of motion in the same court. If he is a non-resident, it is to be served by the marshal of any district within which the adverse party is found, in like manner as other process of the court. A stay of proceedings to enforce the award pending the determination of a motion to vacate, modify or correct is provided. The papers to be filed with the order granted on such applications are specified. The judgment is to be docketed as though rendered in an action and has the same force and effect and is subject to the same provisions of law as judgments in an action. Hence it may be enforced like an ordinary judgment. LEGAL JUSTIFICATION By the Constitution of the United States Congress is given power "to regulate commerce with foreign nations, and among the several States, and with the Indian tribes," and "to constitute tribunals inferior to the Supreme Court." (Art. I, Sec. 8.) "The judicial power of the United States shall be vested in such inferior courts as the Congress may from time to time ordain and establish" and extends "to all cases in law and equity arising under this Constitution, the laws of the United States," and "to all cases of admiralty and maritime jurisdiction." (Art. III, secs. 1 and 2.) Congress is given authority to make all laws necessary and proper to carry into execution the powers vested by the Constitution in the Government or any depart ment or officer thereof. (Art. I, sec. 8.) Powers not delegated to the United States are reserved to the States. (Tenth amendment.) It does not seem that the law depends for its validity solely on the exercise of the interstate commerce and admiralty powers of Congress. The statute establishes a procedure in the Federal courts for the enforcement of arbitration agreements. It rests upon the constitutional provision by which Congress is authorized to establish and control inferior Federal courts. So far as congressional acts relate to the procedure in the Federal courts, they are clearly within the congressional power. This principle is so evident and so firmly established that it can not be seriously disputed. A Federal statute providing for the enforcement of arbitration agreements does relate solely to procedure of the Federal courts. It is no infringement upon the right of cach State to decide for itself what contracts shall or shall not exist under its laws. To be sure whether or not a contract exists is a question of the substantive law of the jurisdiction wherein the contract was made. But whether or not an arbitration agreement is to be enforced is a question of the law of procedure and is determined by the law of the jurisdiction wherein the remedy is sought. That the enforcement of arbitration contracts is within the law of procedure as distinguished from substantive law is well settled by the decisions of our courts. (U. Š. Asphalt R. Co. v. Trinidad Lake P. Co., 222 Fed. 1006; Aktieselskabet K. F. K. v. Rederiaktiebolaget Atlanten, 232 Fed. 403, affirmed with opinion; 250 Fed. 935; affirmed by United States Supreme Court with opinion, March 22, 1920; The Eros, 241 Fed. 186; Meacham v. Jamestown, F. & C. R. R. Co., 211 N. Y. 346; Benson v. Eastern B. & L. Association, 175 N. Y. 83; D. & H. Canal Co. v. Penn Coal Co., 50 N. Y. 250, 259.) The rule is succinctly stated in the Meacham case, supra; "An agreement that all differences arising under a contract shall be submitted to arbitration relates to the law of remedies, and the law that governs remedies is the law of the forum." Neither is it true that such a statute, when it declares arbitration agreements to be valid, declares their existence as a matter of substantive law. The courts have always recognized that such agreements have existed but have refused to enforce them. It was often said loosely that arbitration agreements were void, even under the common-law rule. This statement was not accurate. While the courts refused to enforce arbitration agreements specifically, they recognized their existence because they gave another remedy. From the earliest times it was held that for a breach of arbitration agreement the aggrieved party was entitled to damages. (Hamilton v. Homes Ins. Co., 137 U. S. 370, 385; Miller v. Canal Co., 41 N. Y. 98; Union Ins. Co. v. Central Trust Co., 167 N. Y. 633; Haggart v. Morgan, 5 N. Y. 422, 427; Finucane Co. v. Board of Education, 190 N. Y. 76, 83.) In no proper sense, therefore, was the arbitration agreement void. It was valid in the same sense that most contracts are valid, i. e., while specific performance would not be given, a remedy for a breach existed in the right to recover damages. So far as the present law declares simply the policy of recognizing and enforcing arbitration agreements in the Federal courts it does not encroach upon the province of the individual States. It seems probable, however, that Congress has ample power to declare that all arbitration agreements connected with interstate commerce or admiralty transactions shall be recognized as valid and enforcible even by the State courts. In both cases the Federal power is supreme. Congress may act at its will, and having acted, no law or regulation of a State inconsistent with the congressional act can be given any force or effect even in the courts of the State itself. They are as much bound to carry out the provisions of such a Federal statute as though it was an act of their own legislature. This rule is so well settled that it is no longer subject to question or discussion. It has been enforced in innumerable instances. (Northern Securities Co. v. U. S., 193 U. S. 197, 333.) It is not only the actual and physical interstate shipment of goods which is subject to the interstate commerce powers of the Federal Government, but these powers govern every agency or act which bears so close a relationship to interstate commerce that they can reasonably be said to affect it. Contracts relating to interstate commerce are within the regulatory powers of Congress. (Board of Trade Olsen, U. S. S. C. Adv. Op. No. 13, May 1, 1923, p. 519; American Express Co. v. Iowa, 196 U. S. 133, 143.) V. The only questions which apparently can be raised in this connection are whether the failure to enforce an agreement for arbitration imposes such a direct burden upon interstate commerce as seriously to hamper it or whether the enforcement of such a clause is of material benefit. If either of these questions can be answered in the affirmative, we believe it to be beyond question that Congress can legislate concerning the matter. Even if, however, it should be held that Congress has no power to declare gener. ally that in all contracts relating to interstate commerce arbitration agreements shall be valid, the present statute is not materially affected. The primary purpose of the statute is to make enforceable in the Federal courts such agreements for arbitration, and for this purpose Congress rests solely upon its power to prescribe the jurisdic tion and duties of the Federal courts. PUBLIC POLICY As a It must not be felt that the adoption of arbitration as a substitute for proceedings at law is a novelty, the success of which is uncertain. Despite the apparent hostility of the courts, the remedy has had a sufficient trial to prove its worth. matter of fact, the hostility of the courts in recent years was more apparent than real and was due to an adherence to precedent. There are plenty of expressions throughout the reports, showing that the courts favored arbitration but felt themselves unable to enforce it without legislative consent. (D. & H. Canal Co. v. Penn Coal Co., 50 N. Y. 250; U. S. Asphalt Refining Co. v. Trinidad Lake Petroleum Co., 222 Fed. 1006.) The root of the rule declaring that agreements to arbitrate were unenforceable is found many centuries removed from the present day, in a time when there existed a real jealousy on the part of the courts for their jurisdiction and the rule became so firmly established that no court felt itself at liberty to disregard it. Nevertheless in many of our States and for a long time procedure has been provided by which a dispute, after it had arisen, might be submitted to arbitration, and in 1920 the first statute validating agreements to submit disputes to arbitration in anticipation of their arising was adopted by he State of New York. (Chapter 275, Laws of 1920, New York.) This was followed by a statute in similar form in New Jersey. (Chapter 134, Laws of 1923, New Jersey.) The experiences of disputants under those two statutes has been so satisfactory that the system is spreading rapidly and gaining remarkable popularity. The evils at which arbitration agreements in general are directed are three in number: 1. The delay incident to a proceeding in our courts, which, in centers of commercial activity where there exists congestion of the court calendars, frequently amounts to several years. Contributing to this delay are the preliminary motions and other steps which litigants may take and the appeals which are open to them. 2. The expense of litigation. 3. The failure, through litigation, to reach a decision regarded as just when measured by the standards of the business world. This failure may result either because the courts necessarily apply general rules which do not fit all specific cases, or because the judge or the jury is not and cannot be made familiar with the pecul iarities of the given controversy. A judgment by men particularly experienced in the given field is one of the greatest advantages of arbitration. From our summary of the provisions of the Federal law, it will appear how thoroughly delay has been excised from the settlement of disputes. There are no technical pleadings to be drawn and settled, no multiplicity of motions to be decided, and only the very briefest delay in the decision of the preliminary matter, where and how the arbitration shall proceed. Probably the great majority of arbitrations are decided at one hearing and the award is made within two or three days after the matter is submitted to the arbitrators. If the party against whom the award is rendered refuses to perform it, the matter of its confirmation again takes only a few days, since it is treated as a motion before the court; and while the right of appeal from the judgment entered on the confirmation is preserved, the grounds of appeal are so circumscribed that few appeals can be taken. APPROPRIATIONS FOR CITY HOSPITALS FAVORED Mr. WILSON S. KINNEAR.-Mr. Chairman and gentlemen, parallel with the action taken by this Chamber in November, 1923, urging a favorable vote on a referendum providing for a bond issue of $50,000,000 to meet the needs of the State Hospitals, comes a somewhat similar call for adequate appropriation for municipal hospitals. The printed copy of our report is before you, and I will confine my reading to the resolution : |