The Federal Arbitration Act (hereinafter “FAA”) was enacted at a time in United State’s history where federal courts sitting in diversity applied a general federal common law. Since 1925, the legal landscape of the country has changed dramatically. In 1938, Erie Railroad Co. v. Tompkins eliminated the concept of federal common law and required courts sitting in diversity to apply state law. However, even in light of Erie, the FAA has been consistently applied to uphold arbitration contracts that would otherwise be invalidated by state law. The FAA has had a very liberal application in the United States law of arbitration. The FAA has been favored as the dominant force in governing enforcement of arbitration agreements; essentially, interpretation and application of the FAA has implied a federal right to arbitrate. In most cases, the FAA will preempt any state arbitration law that would void an otherwise valid arbitration agreement under the FAA.
Tiffany Bennett, Restricting the Reach of the Federal Arbitration Act: South Carolina Supreme Court Applies State Law and Invalidates an Arbitration Agreement in a Residential Real Estate Transaction, 5 Y.B. Arb. & Mediation 295 (2013).