Enforcing arbitration clauses in contracts - Research Paper Example

Any subcontract entered into thereafter is subject to the initial contract on arbitration (Yale law journal 6). Under the American contract law, Parties are allowed to agree to arbitrate disputes arising from contracts entered as provided for in the Federal Arbitration Act 9 U. S.C. The Act pre-empts any state law which imposes special requirement on the enforceability of the arbitration. In the case of Oxford Health Plans v. Sutter, the plaintiff sued the defendant at the New Jersey state court for failure to make prompt payments.

Oxford Health had entered into an agreement with Sutter that they shall have all their cases outside court. No civil action vis-à-vis any dispute arising under this Agreement shall be instituted beforehand any court, and all such disagreements shall be submitted to final, ultimate and binding arbitration (Strong pg. 23). The court advocated for an arbitrator as per the contract. The arbitrator ruled that the case warrants a court hearing. Oxford sought to overturn the decision on grounds that the arbitrator had operated in excess of his authority.

According to the Arbitrator, the case was of material concern to all parties and warranted proper class hearings. When forwarded to the US Supreme Court, the court ruled that the arbitrator was within his jurisdiction to warrant a case hearing. Based on Stolt-Nielsen S, A v. Animal feeds int’l Corp case, the court ruled that the arbitrator could call for a class hearing if the matter were principle to the two parties and only proper legal channels could solve the case. The arbitrator can submit to class adjudication unless there is a contractual basis for ending the party agreed to do so (Harvard journal of law & gender).

In this case, the arbitrator has not overdone his mandate to warrant a class hearing (Federal Arbitration Act). In a similar case, American Express Co. v. Italian Colors restaurants, the