Arbitration is a valuable tool for resolving disputes when there is equal bargaining power between parties who knowingly choose this method of dispute resolution. Such is not the case in the context of pre-dispute arbitration clauses so often unwittingly signed by patients prior to treatment.

The United States Arbitration Act provides in part that:

A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

9 U.S.C. § 2 (1947) (emphasis supplied). Although the initial purpose of the Federal Arbitration Act was to regulate agreements between commercial entities bargaining at arm’s length, it is often cited by commercial entities seeking to enforce such clauses against patients, and has been consistently held to preempt state laws attempting to regulate arbitration clauses. Southland Corp. v. Keating, 465 U.S. 1, 104 S.Ct. 852 (1984) (Federal Arbitration Act preempted state law voiding arbitration clause). On June 17, 1999, The Consumer Fairness Act of 1999 was introduced in the House of Representatives for the purpose of treating "arbitration clauses which are unilaterally imposed on consumers as an unfair and deceptive trade practice and prohibit their use in consumer transactions, and for other purposes." H.R. 2258, Luis Gutierrez, D-IL. On July 15, 1999, the bill was referred to House Subcommittee. In the meantime, mandatory arbitration clauses in medical negligence cases can be defeated on a case-by-case basis.

As the final sentence of the Federal Arbitration Act implies, it is fundamental that there must first be a valid arbitration agreement. Southland Corp. v. Keating, 465 U.S. 1, 10-11, 104 S.Ct. 852, 858, 79 L.Ed.2d 1 (1984) (valid arbitration agreement "must be part of a written maritime contract or a contract 'evidencing a transaction involving commerce' and such clauses may be revoked upon 'grounds as exist at law or in equity for the revocation of any contract'") (quoting 9 U.S.C. § 2 (1947)); Blow v. Shaughnessy, 68 N.C. App. 1, 16, 313 S.E.2d 868, 876 ("Considerations of policy aside, we note that one common thread . . is the existence of a valid agreement. 9 U.S.C. § 2 provides for the validity and enforceability of agreements to arbitrate 'save upon such grounds as exist at law or in equity for the revocation of any contract.'") (quoting 9 U.S. C. § 2 (1947)), disc. rev. denied, 311 N.C. 751, 321 S.E.2d 127 (1984).

The validity and enforceability of any purported mandatory arbitration agreement is determined by principles of state contract law. Accordingly, "generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening § 2" of the Federal Arbitration Act. Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681, 116 S.Ct. 1652, 1656 (1996) (striking down Montana Statute containing specific first-page notice requirements for contracts subject to mandatory arbitration). See e.g., Routh v. Snap-On Tools Corporation, 108 N.C. App. 268, 271, 423 S.E.2d 791, 794 (1992) (arbitration clause within termination agreement invalid due to lack of mutual assent).