Prima Paint Corp. v. Flood & Conklin Mfg. Co.
Opinion of the Court
delivered the opinion of the Court.
This case presents the question whether the federal court or an arbitrator is to resolve a claim of “fraud in
The question arises from the following set of facts. On October 7, 1964, respondent, Flood & Conklin Manufacturing Company, a New Jersey corporation, entered into what was styled a “Consulting Agreement,” with petitioner, Prima Paint Corporation, a Maryland corporation. This agreement followed by less than three weeks the execution of a contract pursuant to which Prima Paint purchased F & C’s paint business. The consulting agreement provided that for a six-year period F & C was to furnish advice and consultation “in connection with the formulae, manufacturing operations, sales and servicing of Prima Trade Sales accounts.” These services were to be performed personally by F & C’s chairman, Jerome K. Jelin, “except in the event of his death or disability.” F & C bound itself for the duration of the contractual period to make no “Trade Sales” of paint or paint products in its existing sales territory or to current customers. To the consulting agreement were appended lists of F & C customers, whose patronage was to be taken over by Prima Paint. In return for these lists, the covenant not to compete, and the services of Mr. Jelin, Prima Paint agreed to pay F & C certain percentages of its receipts from the listed customers and from all others, such payments not to exceed $225,000 over the life of the agreement. The agreement took into account the possibility that Prima Paint might encounter financial difficulties, including bankruptcy, but no corresponding reference was made to possible financial problems which might be encountered by F & C. The agreement stated that it “embodies the entire understanding of the parties
“Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration in the City of New York, in accordance with the rules then obtaining of the American Arbitration Association . . . .”
The first payment by Prima Paint to F & C under the consulting agreement was due on September 1, 1965. None was made on that date. Seventeen days later, Prima Paint did pay the appropriate amount, but into escrow. It notified attorneys for F & C that in various enumerated respects their client had broken both the consulting agreement and the earlier purchase agreement. Prima Paint’s principal contention, so far as presently relevant, was that F & C had fraudulently represented that it was solvent and able to perform its contractual obligations, whereas it was in fact insolvent and intended to file a petition under Chapter XI of the Bankruptcy Act, 52 Stat. 905, 11 U. S. C. § 701 et seg., shortly after execution of the consulting agreement. Prima Paint noted that such a petition was filed by F & C on October 14, 1964, one week after the contract had been signed. F & C’s response, on October 25, was to serve a “notice of intention to arbitrate.” On November 12, three days before expiration of its time to answer this “notice,” Prima Paint filed suit in the United States District Court for the Southern District of New York, seeking rescission of the consulting agreement on the basis of the alleged fraudulent inducement.
The District Court granted F & C’s motion to stay the action pending arbitration, holding that a charge of fraud in the inducement of a contract containing an arbitration clause as broad as this one was a question for the arbitrators and not for the court. For this proposition it relied on Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F. 2d 402 (C. A. 2d Cir. 1959), cert. granted, 362 U. S. 909, dismissed under Rule 60, 364 U. S. 801 (1960). The Court of Appeals for the Second Circuit dismissed Prima Paint’s appeal. It held that the contract in question evidenced a transaction involving interstate commerce; that under the controlling Robert
The key statutory provisions are § § 2, 3, and 4 of the United States Arbitration Act of 1925. Section 2 provides that a written provision for arbitration “in any maritime transaction or a contract evidencing a transaction involving commerce . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”
With respect to cases brought in federal court involving maritime contracts or those evidencing transactions in “commerce,” we think that Congress has provided an explicit answer. That answer is to be found in § 4 of the Act, which provides a remedy to a party seeking to compel compliance with an arbitration agreement. Under §4, with respect to a matter within the jurisdiction of the federal courts save for the existence of an arbitration clause, the federal court is instructed to order arbitration to proceed once it is satisfied that “the making of the agreement for arbitration or the failure to comply [with the arbitration agreement] is not in issue.”
There remains the question whether such a rule is constitutionally permissible. The point is made that, whatever the nature of the contract involved here, this case is in federal court solely by reason of diversity of citizenship, and that since the decision in Erie R. Co. v. Tompkins, 304 U. S. 64 (1938), federal courts are bound in diversity cases to follow state rules of decision in matters which are “substantive” rather than “proce
Affirmed.
Mr. Justice Harlan: In joining the Court’s opinion I desire to note that I would also affirm the judgment below on the basis of Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F. 2d 402 (C. A. 2d Cir. 1959), cert, granted, 362 U. S. 909, dismissed under Rule 60, 364 U. S. 801 (1960).
9 U. S. C. §§ 1-14.
Although the letter to F & C’s attorneys had alleged breaches of both consulting and purchasing agreements, and the fraudulent inducement of both, the complaint did not refer to the earlier purchase agreement, alleging only that Prima Paint had been “fraudulently
Whether a party seeking rescission of a contract on the ground of fraudulent inducement may in New York obtain judicial resolution of his claim is not entirely clear. Compare Exercycle Corp. v. Maratta, 9 N. Y. 2d 329, 334, 174 N. E. 2d 463, 465 (1961), and Amerotron Corp. v. Maxwell Shapiro Woolen Co., 3 App. Div. 2d 899, 162 N. Y. S. 2d 214 (1957), aff’d, 4 N. Y. 2d 722, 148 N. E. 2d 319 (1958), with Fabrex Corp. v. Winard Sales Co., 23 Misc. 2d 26, 200 N. Y. S. 2d 278 (1960). In light of our disposition of this case, we need not decide the status of the issue under New York law.
The meaning of “maritime transaction” and “commerce” is set forth in § 1 of the Act.
See, infra, at 403-404.
This conclusion is amply supported by an affidavit submitted to the District Court by Prima Paint’s own president, which read in part:
“The agreement entered into between the parties on October 7, 1964, contemplated and intended an orderly transfer of the assets of the defendant to the plaintiff, and further contemplated and intended that the defendant would consult, advise, assist and help the plaintiff so as to insure a smooth transition of manufacturing operations to Maryland from New Jersey, together with the .sales and servicing of customer accounts and the retention of the said customers.”
The affidavit’s references to a “transfer of the assets” cannot fairly be read to mean only “expertise and know-how . . . and a covenant not to compete,” as argued by counsel for petitioner.
It is suggested in dissent that, despite the absence of any language in the statute so indicating, we should construe it to apply only to “contracts between merchants for the interstate shipment of goods.” Not only have we neither the desire nor the warrant so to amend the statute, but we find persuasive and authoritative evidence of a contrary legislative intent. See, e. g., the House Report on this legislation which proclaims that “[t]he control over interstate commerce [one of the bases for the legislation] reaches not only the
In addition to Robert Lawrence Co., supra, see In re Kinoshita & Co., 287 F. 2d 951 (C. A. 2d Cir. 1961). With respect to claims other than fraud in the inducement, the court has followed a similar process of analysis. See, e. g., Metro Industrial Painting Corp. v. Terminal Constr. Co., 287 F. 2d 382 (C. A. 2d Cir. 1961) (dispute over performance); El Hoss Engineer. & Transport Co. v. American Ind. Oil Co., 289 F. 2d 346 (C. A. 2d Cir. 1961) (where, however, the court found an intent not to submit the issue in question to arbitration).
The Court of Appeals has been careful to honor evidence that the parties intended to withhold such issues from the arbitrators
These cases and others are discussed in a recent Note, Commercial Arbitration in Federal Courts, 20 Vand. L. Rev. 607, 622-625 (1967).
Section 4 reads in part: “The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. ... If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof.”
This position is consistent both with the decision in Moseley v. Electronic Facilities, 374 U. S. 167, 171, 172 (1963), and with the statutory scheme. As the “saving clause” in § 2 indicates, the purpose of Congress in 1925 was to make arbitration agreements as enforceable as other contracts, but not more so. To immunize an arbitration agreement from judicial challenge on the ground of fraud in the inducement would be to elevate it over other forms of contract. — a situation inconsistent with the “saving clause.”
It is true that the Arbitration Act was passed 13 years before this Court’s decision in Erie R. Co. v. Tompkins, supra, brought to an end the regime of Swift v. Tyson, 16 Pet. 1 (1842), and that at the time of enactment Congress had reason to believe that it still had power to create federal rules to govern questions of “general law” arising in simple diversity cases — at least, absent any state statute to the contrary. If Congress relied at all on this “oft-challenged” power, see Erie R. Co., 304 U. S., at 69, it was only supplementary to the admiralty and commerce powers, which formed the principal bases of the legislation. Indeed, Congressman Graham, the bill’s sponsor in the House, told his colleagues that it “only affects contracts relating to interstate subjects and contracts in admiralty.” 65 Cong. Rec. 1931 (1924). The Senate Report on this legislation similarly indicated that the bill “[relates] to maritime transactions and to contracts in interstate and foreign commerce.” S. Rep. No. 536, 68th Cong., 1st Sess., 3 (1924).
Non-congressional sponsors of the legislation agreed. As Mr. Charles L. Bernheimer, chairman of the Arbitration Committee of the New York Chamber of Commerce, told the Senate subcommittee, the proposed legislation “follows the lines of the New York arbitration law, applying it to the fields wherein there is Federal jurisdiction.
Dissenting Opinion
dissenting.
The Court here holds that the United States Arbitration Act, 9 U. S. C. §§ 1-14, as a matter of federal substantive law, compels a party to a contract containing a written arbitration provision to carry out his “arbitration agreement” even though a court might, after a fair trial, hold the entire contract — including the arbitration agreement — void because of fraud in the inducement. The Court holds, what is to me fantastic, that the legal issue of a contract’s voidness because of fraud is to be decided by persons designated to arbitrate factual controversies arising out of a valid contract between the parties. And the arbitrators who the Court holds are to adjudicate the legal validity of the contract need not even be lawyers, and in all probability will be nonlawyers, wholly unqualified to decide legal issues, and even if qualified to apply the law, not bound to do so. 1 am by no means sure that thus forcing a person to forgo his opportunity to try his legal issues in the courts where, unlike the situation in arbitration, he may have a jury trial and right to appeal, is not a denial of due process of law. I am satisfied, however, that Congress did not impose any such procedures in the Arbitration Act. And I am fully satisfied that a
I.
The agreement involved here is a consulting agreement in which Flood & Conklin agreed to perform certain services for and not to compete with Prima Paint. The agreement contained an arbitration clause providing that “[a]ny controversy or claim arising out of or relating to this Agreement . . . shall be settled by arbitration in the City of New York.” F & C, contending that Prima had failed to make a payment under the contract, sent Prima a “Notice of Intention to Arbitrate” pursuant to the New York Arbitration Act.
The Court today affirms this holding for three reasons, none of which is supported by the language or history of the Arbitration Act. First, the Court holds that because the consulting agreement was intended to supplement a separate contract for the interstate transfer of assets, it is itself a “contract evidencing a transaction involving commerce,” the language used by Congress to describe contracts the Act was designed to cover. But in light of the legislative history which indicates that the Act was to have a limited application to contracts between merchants for the interstate shipment of goods,
Let us look briefly at the language of the Arbitration Act itself as Congress passed it. Section 2, the key provision of the Act, provides that “[a] written provision in ... a contract . . . involving commerce to settle by arbitration a controversy thereafter arising out of such contract . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” (Emphasis added.) Section 3 provides that “[i]f any suit ... be brought . . . upon any issue referable to arbitration under an agreement in writing for such arbitration, the court . . . upon being satisfied that the issue involved in such suit . . . is referable to arbitration under such an agreement, shall... stay the trial of the action until such arbitration has been had . ...”
Finally, it is clear to me from the bill’s sponsors’ understanding of the function of arbitration that they never intended that the issue of fraud in the inducement be resolved by arbitration. They recognized two special values of arbitration: (1) the expertise of an arbitrator to decide factual questions in regard to the day-to-day performance of contractual obligations,
III.
With such statutory language and legislative history, one can well wonder what is the basis for the Court’s surprising departure from the Act’s clear statement which expressly excepts from arbitration “such grounds as exist at law or in equity for the revocation of any contract.” Credit for the creation of a rationalization to justify this statutory mutilation apparently must go to the Second Circuit’s opinion in Robert Lawrence Co. v. Devonshire Fabrics, Inc., supra. In that decision Judge Medina undertook to resolve the serious constitutional problem which this Court had avoided in Bernhardt by holding the Act inapplicable to a diversity case involving an intrastate contract. That problem was whether the Arbitra
The difficulty in choosing between these two alternatives was that neither, quite contrary to the Court’s position, was “clear beyond dispute” upon reference to the Act’s legislative history.
“It does not involve any new principle of law except to provide a simple method ... in order to give enforcement .... It creates no new legislation, grants no new rights, except a remedy to enforce an agreement in commercial contracts and in*420 admiralty contracts.” 65 Cong. Rec. 1931 (1924). (Emphasis added.)
Finally, there are clear indications in the legislative history that the Act was not intended to make arbitration agreements enforceable in state courts
Suffice it to say that Judge Medina chose the alternative of construing the Act to create federal substantive law in order to avoid its emasculation under Erie and Bernhardt. But Judge Medina was not content to stop there with a holding that the Act makes arbitration agreements in a contract involving commerce enforceable in federal court even though the basis of jurisdiction is diversity and state law does not enforce such
Thus, 35 years after the passage of the Arbitration Act, the Second Circuit completely rewrote it. Under its new formulation, § 2 now makes arbitration agreements enforceable “save upon such grounds as exist at federal law for the revocation of any contract.” And under § 4, before enforcing an arbitration agreement, the district court must be satisfied that “the making of the agreement for arbitration, as a matter of federal law, is not in issue.” And then when Judge Medina turned to the task of “the formulation of the principles of federal substantive law necessary for this purpose,” 271 F. 2d, at 409, he formulated the separability rule which the Court today adopts — not because § 4 provided this rule as an “explicit answer,” not because he looked to the intention of the parties, but because of his notion that the separability rule would further a “liberal policy of promoting arbitration.” 271 F. 2d, at 410.
First. The legislative history is clear that Congress intended no such thing. Congress assumed that arbitration agreements were recognized as valid by state and federal law.
“A Federal statute providing for the enforcement of arbitration agreements does relate solely to pro*423 cedure of the Federal courts. It is no infringement upon the right of each 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.” Committee on Commerce, Trade & Commercial Law, The United States Arbitration Law and Its Application, 11 A. B. A. J. 153, 154. (Emphasis added.)
“Neither is it true that such a statute, declaring arbitration agreements to be valid, is the source of their existence as a matter of substantive law. . . .
“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.” Cohen & Dayton, The New Federal Arbitration Law, 12 Ya. L. Rev. 265, 276-277.
All this indicates that the § 4 inquiry of whether the making of the arbitration agreement is in issue is to be determined by reference to state law, not federal law formulated by judges for the purpose of promoting arbitration.
Second. The avowed purpose of the Act was to place arbitration agreements “upon the same footing as other contracts.”
“Whether a number of promises constitute one contract [and are non-separable] or more than one is to be determined by inquiring ‘whether the parties assented to all the promises as a single whole, so that there would have been no bargain whatever, if any promise or set of promises were struck out.’ ”
Under this test, all of Prima’s promises were part of one, inseparable contract.
Third. It is clear that had this identical contract dispute been litigated in New York courts under its arbitration act, Prima would not be required to present its claims of fraud to the arbitrator if the state rule of non-separability applies. The Court here does not hold today, as did Judge Medina,
IY.
The Court’s summary treatment of these issues has made it necessary for me to express my views at length. The plain purpose of the Act as written by Congress was this and no more: Congress wanted federal courts to enforce contracts to arbitrate and plainly said so in the Act. But Congress also plainly said that whether a contract containing an arbitration clause can be rescinded on the ground of fraud is to be decided by the courts and not by the arbitrators. Prima here challenged in the courts the validity of its alleged contract with F & C as a whole, not in fragments. If there has never been any valid contract, then there is not now and never has been anything to arbitrate. If Prima’s allegations are true, the sum total of what the Court does here is to force Prima to arbitrate a contract which is void and unenforceable before arbitrators who are given the power to make final legal determinations of their own jurisdiction, not even subject to effective review by the highest court in the land. That is not what Congress said Prima must do. It seems to be what the Court thinks would promote the policy of arbitration. I am completely unable to agree to this new version of the Arbitration Act, a version which its own creator in Robert Lawrence practically admitted was judicial legislation. Congress might possibly have enacted such a version into law had it been able to foresee subsequent legal events, but I do not think this Court should do so.
I would reverse this case.
N. Y. Civ. Prac. § 7503 (1963) provides that once a party is served with a notice of intention to arbitrate, “unless the party served applies to stay the arbitration within ten days after such service he shall thereafter be precluded from objecting that a valid agreement was not made . . . .”
The principal support for the Act came from trade associations dealing in groceries and other perishables and from commercial and mercantile groups in the major trading centers. 50 A. B. A. Rep. 357 (1925). Practically all who testified in support of the bill before the Senate subcommittee in 1923 explained that the bill was designed to cover contracts between people in different States who produced, shipped, bought, or sold commodities. Hearing on S. 4213 and S. 4214 before the Subcommittee of the Senate Committee on the Judiciary, 67th Cong., 4th Sess., 3, 7, 9, 10 (1923). The same views were expressed in the 1924 hearings. When Senator Sterling suggested, “What you have in mind is that this proposed legislation relates to contracts arising in interstate commerce,” Mr. Bernheimer, a chief exponent of the bill, replied: “Yes; entirely. The farmer who will sell his carload of potatoes, from Wyoming, to a dealer in the State of New Jersey, for instance.” Joint Hearings on S. 1005 and H. R. 646 before the Subcommittees of the Committees on the Judiciary, 68th Cong., 1st Sess., 7. See also id., at 27.
In some Acts Congress uses broad language and defines commerce to include even that which “affects” commerce. Federal Employers’ Liability Act, 35 Stat. 65, § 1, as amended, 45 U. S. C. § 51; National Labor Relations Act, 49 Stat. 450, §2, as amended, 29 U. S. C. §152 (7). In other instances Congress has chosen more restrictive language. Fair Labor Standards Act of 1938, 52 Stat. 1062, § 6, as amended, 29 U. S. C. § 206. Prior to this ease, this Court has always made careful inquiry to assure itself that it is applying a statute with the coverage that Congress intended, so that the meaning in that statute of “commerce” will be neither expanded nor contracted. The Arbitration Act is an example of carefully limited language. It covers only those contracts “involving commerce,” and nowhere is there a suggestion that it is meant to extend to contracts “affecting commerce.” The Act not only uses narrow language, but also is completely without any declaration of some national interest to be served or some nationwide comprehensive scheme of regulation to be created, and this absence suggests that Congress did not intend to exert its full power over commerce.
Although F & C requested arbitration pursuant to New York law, n. 1, supra, it is not entirely clear that New York law would apply in absence of the federal Act. And, as the Court points out, it is not entirely clear whether New York courts would consider Prima’s promise to arbitrate inseparable from the rest of the contract. But, since Robert Lawrence held and the lower courts here assumed that application of New York law would produce a different result, and since the Court deems the status of state law immaterial to this case, I have assumed throughout this opinion that, in the absence of the Arbitration Act, Prima would have been able to obtain judicial resolution of its fraud allegations under New York law.
This section, unlike § 4, is expressly applicable to situations like the present one where a defendant in a case already pending in federal court moves for a stay of the lawsuit. In finding an “explicit answer” in a provision “not expressly” applicable, the Court almost completely ignores the language of § 3 and the proviso to § 2, a section which Bernhardt held to “define the field in which Congress was legislating.” 350 U. S., at 201.
Senate Hearing, supra, at 5.
Ibid.
Ibid.
Senate Hearing, supra, at 2.
“The one constitutional provision we have got is that you have a right of trial by jury. But you can waive that. And you can do that in advance. Ah, but the question whether you waive it or not depends on whether that is your signature to the paper, or whether you authorized that signature, or whether the paper is a valid paper or not, whether it was delivered properly. So there is a question there which you have not waived the right of trial by jury on.” Joint Hearings, supra, at 17.
It seems quite clear to me that Mr. Cohen was referring to a jury trial of allegations challenging the validity of the entire contract.
Senate Hearing, supra, at 9-11. See also Joint Hearings, supra, at 15.
Senate Hearing, supra, at 9.
“Not all questions arising out of contracts ought to be arbitrated. It is a remedy peculiarly suited to the disposition of the ordinary disputes between merchants as to questions of fact — quantity, quality, time of delivery, compliance with terms of payment, excuses for non-performance, and the like. It has a place also in the determination of the simpler questions of law — the questions of law which arise out of these daily relations between merchants as to the passage of title, the existence of warranties, or the questions of law which are complementary to the questions of fact which we have just mentioned.” Cohen & Dayton, The New Federal Arbitration Law, 12 Va. L. Rev. 265, 281 (1926).
See, e. g., Senate Hearing, supra, at 3.
“It [arbitration] is not a proper remedy for . . . questions with which the arbitrators have no particular experience and which are better left to the determination of skilled judges with a background of legal experience and established systems of law.” Cohen & Dayton, supra, at 281.
Mr. Justice Frankfurter chose this alternative in his concurring opinion in Bernhardt, 350 U. S., at 208, and even the Court there suggested that its pre-Erie decision in Shanjeroke Coal & Supply Corp. v. Westchester Service Corp., 293 U. S. 449, which applied the Act to an interstate contract in a diversity case, might be decided differently under the Bernhardt holding that arbitration is outcome-determinative, 350 U. S., at 202.
For an analysis of these alternatives, see generally, Symposium, Arbitration and the Courts, 58 Nw. U. L. Rev. 466 (1963); Note, 69 Yale L. J. 847 (1960).
The House Report accompanying the Act expressly stated: “The purpose of this bill is to make valid and enforcible agreements for arbitration contained in contracts involving interstate commerce ... or which may be the subject of litigation in the Federal courts.” H. R. Rep. No. 96, 68th Cong., 1st sess., 1 (1924) (emphasis added). Mr. Cohen and a colleague, commenting on the Act after its passage, explained: “The Federal courts are given jurisdiction to enforce such agreements whenever under the Judicial Code they would have had jurisdiction .... Where the basis of jurisdiction is diversity of citizenship, the dispute must involve $3000 as in suits at law.” Cohen & Dayton, supra, at 267. See, e. g., Committee on Commerce, Trade & Commercial Law, The United States Arbitration Law and Its Application, 11 A. B. A. J. 153, 156; Note, 20 Ill. L. Rev. 111 (1925). The bill, as originally drafted by the American Bar Association, 49 A. B. A. Rep. 51-52 (1924), and introduced in the House, H. R. No. 646, 68th Cong., 1st Sess. (1924), 65 Cong. Rec. 11081-11082 (1924), expressly provided in §8 “[t]hat if the basis of jurisdiction be diversity of citizenship . . . the district court . . . shall have jurisdiction . . . hereunder notwithstanding the amount in controversy is unascertained . . . .” Though that provision was deleted by the Senate, the omission was not intended substantially to alter the law. 66 Cong. Rec. 3004 (1925).
Committee on Commerce, Trade & Commercial Law, supra, 11 A. B. A. J., at 154.
Joint Hearings, supra, at 38.
Although Mr. Cohen, in a brief filed with Congress, suggested that Congress might rely on its power over commerce, he added that there were “questions which apparently can be raised in this connection,” id., at 38, and expressly denied that “the proposed law depends for its validity upon the exercise of the interstate-commerce and admiralty powers of Congress,” id., at 37. And when he testified, he made the point clearer:
“So what we have done ... [in New York] is that we have . . . made it a part of our judicial machinery. That is what we have done. But it can not be done under our constitutional form of government and cover the great fields of commerce until you gentlemen do it, in the exercise of your power to confer jurisdiction on the Federal courts. The theory on which you do this is that you have the right to tell the Federal courts how to proceed.” Id., at 17.
The legislative history which the Court recites to support its assertion that Congress relied principally on its power over commerce consists mainly of statements that the Act was designed to cover only contracts in commerce, and that is certainly true. But merely because the Act was designed to enforce arbitration agreements only in contracts in commerce, does not mean that Congress was primarily relying on its power over commerce in supplying that remedy of enforceability.
Cohen & Dayton, supra, at 276.
See, e. g., Cohen & Dayton, supra, at 277; Committee on Commerce, Trade & Commercial Law, supra, at 155, 156. Mr. Rose, representing the Arbitration Society of America, suggested that the Act might have the beneficial effect of encouraging States to enact similar laws, Joint Hearings, supra, at 28, but Mr. Cohen assured Congress:
“Nor can it be said that the Congress of the United States, directing its own courts . . . , would infringe upon the provinces or prerogatives of the States. . . . [T]he question of the enforcement relates to the law of remedies and not to substantive law. The rule must be changed for the jurisdiction in which the agreement is sought to be enforced .... There is no disposition therefore by means of the Federal bludgeon to force an individual State into an unwilling submission to arbitration enforcement/’ Id., at 39-40.
This seems implicit in § 3’s provision for a stay by a “court in which such suit is pending” and § 4’s provision that enforcement may be ordered by “any United States district court which, save for such agreement, would have jurisdiction under Title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties.”
It should be noted that the New York courts apparently do not find any inconsistency between application of a nonseparability rule
S. Rep. No. 536, 68th Cong., 1st Sess., 2 (1924); Joint Hearings, supra, at 38.
Cohen & Dayton, supra, at 271.
Id., at 279.
65 Cong. Rec. 1931 (1924).
H. R. Rep. No. 96, 68th Cong., 1st Sess. (1924).
“This is a declaration of national law equally applicable in state or federal courts.” 271 F. 2d, at 407.
See n. 23, supra.
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