The CAA v. The FAA: The Dangerous Differences

By Paul Dubow

Paul Dubow began arbitrating cases in 1972 and was initially trained as a mediator in 1994. He became a full time neutral in December 2000, following his retirement after 26 years as director of litigation at Dean Witter Reynolds. He has arbitrated or mediated over 550 cases. pdubow2398@aol.com.

The California Arbitration Act (CAA, Code Civ. Proc., § 1280 et seq.) and the Federal Arbitration Act (FAA, 9 U.S.C. § 1 et seq.) are similar. Some differences come into play after arbitration commences. For example, the CAA has the same vacatur provisions as the FAA, but it also contains additional ones. And the CAA contains extensive arbitrator disclosure requirements, while the FAA does not deal with disclosure. If left unaddressed by the drafter, these and other differences could doom the enforceability of an otherwise valid arbitration agreement or an aspect of it. This article discusses some significant differences between the two statutory schemes, the traps they present to the unwary, and how to navigate around them.

The most prominent of these differences is caused by competing provisions in Code of Civil Procedure section 1281.2, subdivision (c), and section 3 of the FAA. It occurs when a dispute involves multiple parties, some of whom have not entered into any arbitration agreement, or multiple claims, some covered by the arbitration agreement and some not.