As consumer bankruptcy filings continue to rise, the role of arbitration has also increased. Because the Federal Arbitration Act and the US bankruptcy code can be at odds with each other and that tension has not yet been tested by the Supreme Court, experts expect that the matter will eventually make its way there.
Professor and bankruptcy expert Bob Lawless, who has written a paper on arbitration and bankruptcy, says that unless amended or repealed, courts should follow both statutes.
Speaking to Bloomberg, he said, “You’ve got to look and say, ‘For this matter in this arbitration agreement, is this subject to arbitration, and does the arbitral demand conflict with a command in the bankruptcy code?’”