Volt Information Sciences v. Leland Stanford Jr. U

In Volt Information Sciences v. Leland Stanford Jr. U. (1989) 489 U.S. 468, Volt petitioned the court to compel arbitration under section 1281.2 and the FAA. The respondent, Stanford University, moved to stay the arbitration under section 1281.2(c), until resolution of the related civil lawsuit. The underlying construction contract contained an agreement to arbitrate all disputes arising out of the contract. The contract further provided that " 'the Contract shall be governed by the law of the place where the Project is located' " ( Volt Info. Sciences at p. 470), that is, California. The trial court denied Volt's motion to compel and ordered the arbitration proceedings stayed under section 1281.2(c), pending resolution of the related civil litigation. The United States Supreme Court in Volt held that "application of the California statute section 1281.2(c) is not pre-empted by the Federal Arbitration Act (FAA or Act), 9 U.S.C. 1 et seq., in a case where the parties have agreed that their arbitration agreement will be governed by the law of California." ( Volt Info. Sciences v. Leland Stanford Jr. U., supra, 489 U.S. at p. 470.) The Volt court explained that "the FAA does not confer a right to compel arbitration of any dispute at any time; it confers only the right to obtain an order directing that 'arbitration proceed in the manner provided for in the parties' agreement.' 9 U.S.C. 4. Here the Court of Appeal found that, by incorporating the California rules of arbitration into their agreement, the parties had agreed that arbitration would not proceed in situations which fell within the scope of Calif. Code Civ. Proc. Ann. 1281.2(c) (West 1982)." (Volt Info. Sciences, supra, at pp. 474-475.) The Volt court added that "There is no federal policy favoring arbitration under a certain set of procedural rules; the federal policy is simply to ensure the enforceability, according to their terms, of private agreements to arbitrate. Interpreting a choice-of-law clause to make applicable state rules governing the conduct of arbitration . . . does not offend the rule of liberal construction . . ., nor does it offend any other policy embodied in the FAA." ( Id. at p. 476.) The Volt court explained that: "In recognition of Congress' principal purpose of ensuring that private arbitration agreements are enforced according to their terms, we have held that the FAA pre-empts state laws which 'require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration.' But it does not follow that the FAA prevents the enforcement of agreements to arbitrate under different rules than those set forth in the Act itself. Indeed, such a result would be quite inimical to the FAA's primary purpose of ensuring that private agreements to arbitrate are enforced according to their terms. . . . Where, as here, the parties have agreed to abide by state rules of arbitration, enforcing those rules according to the terms of the agreement is fully consistent with the goals of the FAA, even if the result is that arbitration is stayed where the Act would otherwise permit it to go forward." ( Volt Info. Sciences v. Leland Stanford Jr. U., supra, 489 U.S. at pp. 478-479 109 S. Ct. at pp. 1255-1256.)