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A federal court in New York determined that the Federal Arbitration Act (FAA) applied to a dispute which, broadly interpreted, involved interstate commerce.
In SDD99, Inc. v. ASA Intern., Ltd., No. 06-CV-6089CJS, 2007 WL 952046 (W.D.N.Y. Mar. 29, 2007), SDD99 filed suit against ASA and its bank, seeking a declaratory judgment that it was entitled to funds held in escrow under the terms of the parties agreement. ASA moved to compel arbitration, but disputed application of the FAA.
The Court disregarded ASA's argument that the dispute was beyond the reach of the FAA; holding that the FAA applied. Instead, the Court held that a broad interpretation of "involving commerce" is requisite with the Act's central policy: to put arbitration on equal footing with other contractual provisions. See Allied-Bruce Terminex Cos., Inc. v. Dobson, 513 U.S. 265 (1995). There is no need to demonstrate intent of the parties for their activities to be within commerce. The contract involved various assignments to ASA of SDD99's out of state customers and the transfer of money across state lines, providing sufficient nexus to interstate commerce to bring the dispute within the purview of the FAA.
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