They argued that too many valuable business relationships were being destroyed through years of expensive adversarial litigation, in courts whose rules differed significantly from the informal norms and conventions of businesspeople.

The United Steelworkers of America adopted an elaborate form of interest arbitration, known as the Experimental Negotiating Agreement, in the 1970s as a means of avoiding the long and costly strikes that had made the industry vulnerable to foreign competition.

The Amalgamated Clothing Workers of America made arbitration a central element of the Protocol of Peace it negotiated with garment manufacturers in the second decade of the twentieth century.

The War Labor Board, which attempted to mediate disputes over contract terms, pressed for inclusion of grievance arbitration in collective bargaining agreements.

Those agreements were upheld by the United States Supreme Court in Shearson v. MacMahon, 482 U.S. 220 (1987) and today nearly all disputes involving brokerage firms, other than Securities class action claims,[11] are resolved in arbitration.

[12] Some state court systems have promulgated court-ordered arbitration; family law (particularly child custody) is the most prominent example.

Litigation attorneys present their side of the case to an independent tertiary lawyer, who issues an opinion on settlement.

Should the parties in question decide to continue to dispute resolution process, there can be some sanctions imposed from the initial arbitration per terms of the contract.

[14] In AT&T Mobility v. Concepcion (2011), the Supreme Court upheld an arbitration clause in a consumer standard form contract which waived the right to a lawsuit and class action.

[16] The Supreme Court has also ruled that questions on whether an arbitration clause should be enforced at all permits litigation involving the rest of the case to be stayed.

Motions to compel arbitration involving excluded disputes then on would not be honored, as seen in a 2023 ruling made by the Ninth Circuit via one of its judicial panels.

[22] Although properly drafted arbitration clauses are generally valid, they are subject to challenge in court for compliance with laws and public policy.

Citing Hooters v. Phillips, the court expressed when an employer has the ability “in whole or in part” to modify the arbitration provision without notice to its employees.

California's Court of Appeal reached a similar conclusion in Peleg v. Neiman Marcus, in which a unilateral modification to an arbitration agreement invalidated the clause.

Justice Elena Kagan, writing for the court's unanimous ruling in favor of hourly Taco Bell employee Robyn Morgan, found that the Eighth Circuit created "special rules" in which Morgan was compelled to arbitrate based on Sundance's prejudice (delay) of compelling arbitration.

[38][39] The opinion on a party waiving its right to compel arbitration if it had litigated extensively prior to the motion has been further confirmed in light of Davis and Espinoza when one of Bronx County's justices ruled in Worbes Corp v. Sebrow.

Justice Fidel Gomez states that if a party who intended to compel arbitration brought a "substantive defense" before the court, served a trial notice, moved to depose a witness, or "interposed a counterclaim demanding money damages", that party would have waived its right to compel arbitration.

Additionally, Judge Hall prospected that entire arbitration agreements could become invalid if a single provision is found to be unenforceable by a court.

The Supreme Court has taken a pro-arbitration stance across most but not all cases, although the federal government, most recently in 2022, has passed certain exemptions to arbitration agreements.

Under the law, claims which are filed after March 3, 2022, and fall under the scope of EFAA shall have agreements to submit disputes to binding arbitration and class action waivers within contracts signed deemed unenforceable for the entire case, though the law allows for claimants to have a case decided by binding arbitration if the plaintiff wishes upon filing.

The law was championed by Gretchen Carlson, a former Fox News host sexually harassed for many years by then CEO Roger Ailes; she also opposed the use of non-disclosure agreements to shield perpetrators.

[52] These concerns were ultimately confirmed in February 2023, where New York federal judge Paul A. Engelmayer ruled in two lawsuits against the company Everyrealm that if at least one claim in a single case was an act of sexual assault or sexual harassment, the pre-dispute arbitration agreement was unenforceable and arbitration could not be compelled.

Engelmayer's decision was rooted in the decision from Congress to directly amend the Federal Arbitration Act, and its actions to do so were indicative of its intention to prohibit the practice in entire cases which the EFAA covers; Engelmayer, however, clarified that the claim of sexual assault or harassment must be reasonable and that the EFAA does not enable implausible claims of sexual harassment to be used to "dodge" arbitration agreements.

[53] One month later, a California court ruling on a sexual harassment lawsuit filed against Tesla further confirmed the EFAA's ability to ban compelling arbitration in sexual harassment suits, and a second New York federal court earlier came to a similar conclusion in a case filed by an investment banker.

From a federal perspective, however, a circuit court ruling has determined that McCarran-Ferguson requires a state statute rather than administrative interpretations.

[60] The Protecting Older Americans Act is pending legislation first filed in the 118th Congress by South Carolina Republicans Lindsey Graham in the Senate and Nancy Mace in the House.

[61] In November 2022, the Department of Education and the office on Federal Student Aid passed new rules which included reinstating a ban on institutions participating in its Direct Loan Program from utilizing pre-dispute mandatory arbitration agreements and class action waivers in cases relating to Borrower Defense to Repayment.

[65] The FAA has been interpreted to preempt and invalidate state laws which prevent or discriminate against the enforcement of arbitration agreements.

Similar fates have been bestowed upon legislation in New Jersey, New York, and Washington state which attempted to reduce the scope of arbitration clauses.

However, in other cases a party will have to petition to receive a court judgment[71][72] for enforcement through various means such as a writ of execution, garnishment, or lien.