Lead Opinion
Wе granted certiorari in this appeal to determine whether 9 USC § 16 (a) (1) (B) of the Federal Arbitration Act, 9 USC § 1 et seq. (the “FAA”), which grants federal litigants the right to directly appeal a trial court’s order refusing to compel arbitration, pre empts OCGA § 5-6-34 (b), a statute which requires parties seeking to appeal from such an order in state courts to follow interlocutory appeal procedures. Because we conclude § 5-6-34 (b) is a procedural statute not preempted by 9 USC § 16 (a) (1) (B), the Court of Appeals’ order dismissing the direct appeal filed in this case is affirmed.
In September 2010, appellant American General filed an action against appellee Daniel Jape to recover monies he allegedly owed pursuant to a loan agreement between the parties. The agreement contains an arbitration provision authorizing either party to elect to resolve by binding arbitration claims and disputes arising thereunder. It further provides that the FAA applies to and governs the agreement.
Jape subsequently counterclaimed for breach of contract. Several months after the filing of the counterclaim, American General filed a motion under § 4 of the FAA to compel arbitration only of Jape’s counterclaim. See 9 USC § 4 (authorizing parties to a written arbitratiоn agreement to petition court of competent jurisdiction to compel arbitration). The trial court denied the motion to compel, finding that American General waived its right to compel arbitration by seeking judicial resolution of its arbitrable claim against Jape. See Taft v. Burttram,
1. As an initial matter, we must determine whether the FAA has any applicability to the parties’ agreement to arbitrate. Section 2 of the FAA provides that arbitration agreements “shall be vаlid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 USC § 2. The FAA applies in state and federal courts to all contracts containing an arbitration clause that involves or affects interstate commerce. Perry v. Thomas,
2. Having determined that the FAA is generally applicable to the contract between the parties, we turn to the issue of whether American General has a right to a direct appeal from the trial court’s order denying its motion to compel arbitration. American General argues that a direct appeal is mandated by 9 USC § 16 (a) (1) (B) of the FAA, which provides that an appeal may be taken from an order denying a motion to compel arbitration to proceed.
Because the FAA contains no express preemptive provision and does not reflect a congressional intent to occupy the entire field of arbitration, its provisions will preempt state law only to the extent it “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Hines v. Davidowitz,
Consistent with Congress’ intent to ensure the enforceability of arbitration agreements, the United States Supreme Court has held the FAA preempts state laws requiring a judicial forum for the resolution of disputes pertaining to a particular subject matter or which require judicial resolution of a claim the parties have agreed to resolve by arbitration. See AT&T Mobility v. Concepciоn, _U. S._ (131 SC 1740, 179 LE2d 742) (2011) (state law prohibiting arbitration
While recognizing in these cases that the FAA creates a body of federal substantive law of arbitrability applicable in both federal and state courts, the Supreme Court has not had the occasion to determine whether the FAA’s procedural provisions are applicable in state courts. See Perry, supra,
Although the Supremе Court has not addressed the exact issue before us, our Court of Appeals has twice held that the FAA does not preempt OCGA § 5-6-34 (b)’s jurisdictional requirements because the provision sets forth procedural rules which do not undermine the purposes and objectives of the FAA. Vereen, supra,
because our procedural law permits a trial court to certify [an order denying a motion to compel arbitration] for immediate appeal рursuant to OCGA § 5-6-34 (b), parties, such as those here, are provided with an avenue for seeking appellate review that is not inconsistent with the objectives of the FAA to enforce legitimate arbitration agreements. [Cit.] While the denial of an application for interlocutory appeal, as occurred here, may delay arbitration, such delay is not tantamount to the failure to enforce valid arbitration agreements сontrary to congressional objectives. [Cit.]
Vereen, supra,
We find the rationale of these cases persuasive and conclude that OCGA § 5-6-34 (b) is not preempted by the FAA. “[I]n enacting § 2 of the federal Act, Congress declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration.” Southland Corp., supra,
Rather, OCGA § 5-6-34 (b) is a procedural rule concerning the jurisdiction of our state courts to review all non-final orders. Like the provision in Volt, it determines “only the efficient order of proceedings” and does “not affect the enforceability of the . . . agreement itself.” Doctor’s Assocs. v. Casarotto,
Relying on Preston, supra,
Aprime objective of an agreement to arbitrate is to achieve “streamlined proceedings and expeditious results.” [Cits.] That objective would be frustrated even if [a party] could compel arbitration [after agency review because Requiring initial reference of the parties’ dispute to the Labor Commissioner would, at the least, hinder speedy resolution of the controversy.
Id. at 357-358.
While we, like the Preston Court, acknowledge that delay in the proceedings may in some circumstances be a hindrance to the objectives of an arbitration agreement, and
In the present appeal, we address a non-discriminatory рrocedural statute which may, in some cases, delay the parties’ proceedings by denying them the right to a direct appeal from a non-final order. This result, however, is not inconsistent with the FAA’s primary objectives of overruling the judiciary’s refusal to enforce arbitration agreements and to enforce arbitration agreements according to their terms. Nor does it create such a burden upon interstate commerce tо require preemption.
Judgment affirmed.
Notes
9 USC § 16 provides:
(a) An appeal may be taken from -
(1) an order -
(A) refusing a stay of any action under section 3 of this title,
(B) denying a petition under section 4 of this title to order arbitration to proceed,
(C) denying an application under section 206 of this title to compel arbitration,
(D) confirming or denying confirmation of an award or partial award, or
(E) modifying, correcting, or vacating an award;
(2) an interlocutory order granting, continuing, or modifying an injunction against an arbitration that is subject to this title; or
(3) a final decision with respect to an arbitration that is subject to this title.
(b) Except as otherwise provided in section 1292 (b) of title 28, an appeal may not be taken from an interlocutory order —
(1) granting a stay of any action under section 3 of this title;
(2) directing arbitration to proceed under section 4 of this title;
(3) cоmpelling arbitration under section 206 of this title; or
(4) refusing to enjoin an arbitration that is subject to this title.
For example, § 4 provides that the Federal Rules of Civil Procedure apply in proceedings to compel arbitration. It is beyond dispute, however, that these federal rules do not apply in state court proceedings. See also 9 USC § 3 (referring to proceedings “brought in any of the courts of the United States”) and § 4 (referring to “any United States district court”).
Because we recognize that an incorrect determination that a dispute is not subject to arbitration may cause the parties unnecessary expense and delay, we urge courts, except in the clearest cases, to certify orders denying a motion to compel arbitration. See Phillips Constr. Co. v. Cowart Iron Works,
Concurrence Opinion
concurring specially.
I concur in the result of the majority opinion and in most of its reasoning, although I believe it downplays the weight of Congress’ intent, expressed through the Federal Arbitration Act (FAA), “ ‘to move the parties to an arbitrable dispute out of court and into arbitration as quickly and easily as possible.’ ” Preston v. Ferrer,
I nevertheless think this is a fairly easy case to decide, due to a factor the majority opinion mentions only in passing. Our interlocutory appeal statute is not a run-of-the-mill procedural provision applicable in state court. It is a jurisdictional law by which the General Assembly has limited the authority of Georgia’s appellate courts to hear certain cases. “[W]hen the order appealed from is an interlocutory order, the appellate court does not acquire jurisdiction unless the procedure of OCGA § 5-6-34 (b) for interlocutory appeal is followed.” Cherry v. Coast House, Ltd.,
It is one thing to find that Congress intended to impose federal substantive or procedural rules on a type of case that a State has opened its courts to hear. It would be quite another thing to find that Congress intended to require a State to open its courts to hear such a case. Doing so would raise significant constitutional сoncerns, particularly where Congress was acting under its Article I Commerce Clause power, see U. S. Const., Art. I, Sec. 8, Cl. 3, as it didin enacting the FAA. See Bush v. Paragon Property, Inc.,
We need not go so far as to decide that Congress could not constitutionally require Georgia’s appellate courts to hear interlocutory appeals from orders denying arbitration. The federalism questions that would be raised by such preemption are significant enough to counsel a finding that FAA § 16 was not intended to trump OCGA § 5-6-34 (b). A finding of preemption forcing a state court to hear interlocutory appeals of certain orders on arbitration cases would be even more aggressive where the State’s jurisdictional statute shows no hostility to arbitration agreements and is not “outcome determinative,” Johnson,
I am authorized to state that Justice Blackwell joins in this special concurrence.