While not the sexiest topic in the construction world, transactional attorneys and litigators in New Jersey should be aware of recent case law and media attacks regarding arbitration. Recent divergent opinions from the United States Supreme Court and the New Jersey Supreme Court are proving difficult to reconcile, regarding the enforceability of agreements to arbitrate disputes.
At the heart of the debate is the U.S. Supreme Court’s application of the Federal Arbitration Act (FAA), 9 U.S.C.A. §§1–16, to pre-empt efforts by state laws and their courts that undermine the goals and policies of the FAA. Indeed, the New Jersey Supreme Court has taken a hard-line position: contracts must expressly state that the parties are aware that in electing arbitration as the exclusive remedy, they clearly and unambiguously waive their Constitutional right to sue. If the contract is not clear and unambiguous, New Jersey courts will reject efforts to compel arbitration.
Arbitration Basics
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