The Presidents and Arbitration

By George H. Friedman*

Chairman of the Board, Arbitration Resolution Services


A year ago, I published an update to my 2016 blog post, “The Presidents and Arbitration: from Washington to Obama – and Beyond,” renaming it “The Presidents and Arbitration: from Washington to Trump.” The material about President Trump and arbitration was in large part predictive. No longer. The past year demonstrates that the President is indeed a big fan of arbitration. The material that follows about the past presidents is mostly repeated from my 2016 blog post; the President Trump section is new.


There’s a wonderful book, The Presidents Club, covering the unique and sometimes surprising relationships among the fraternity (sorry, Carly and Hillary, no sorority yet) of current and former presidents. For example, who knew that Bill Clinton and the Bushes are very close, with “W” often referring to Bill as his “brother of another mother”? Or that Richard Nixon sought advice from Herbert Hoover over whether to contest his razor-thin loss to JFK in 1960? Or that Jimmy Carter elicits a common reaction – not entirely flattering – from the former presidents? These rarely told stories are of course fascinating, but this blog post covers a different kind of relationship: that of the presidents and arbitration. As we approach Presidents Day, I offer this primer on the little-known and often surprising relationships between our presidents and this form of alternative dispute resolution.


George Washington: think arbitration is new?

People have for years referred to arbitration as a bold new way of resolving disputes. I demonstrated in an early 2016 blog post that arbitration goes way back. For now, let’s prove the point by looking at our first[1] president’s Last Will and Testament. That’s right, George Washington’s Will from July 1799 calls for arbitration to resolve disputes among his heirs:

I hope and trust that no disputes will arise concerning [my Will]; but if, contrary to expectation, the case should be otherwise from the want of legal expression, or the unusual technical terms, or because too much or too little has been said on any of the devises to be consonant with the law, my will and direction expressly is, that all disputes (if unhappily any should arise) shall be decided by three impartial and intelligent men, known for  their probity and good understanding; — two to be chosen by the disputants — each having the choice of one — and the third by those two — which three men thus chosen, shall unfettered by Law, or legal constructions, declare their sense of the Testator’s intention … and shall be binding as if issued by the U.S. Supreme Court.


Ulysses S. Grant, the Civil War and arbitration

Ever hear of the Treaty of Washington of 1871? Neither had I. It seems that after the Civil War the U.S. asserted claims against the British, whose shipbuilders had supplied warships to the Confederacy. Things got serious. According to History Central, “at one point, a claim was made that Britain was responsible for half the cost of the war, and that the U.S. would consider Canada proper payment. This shocked the British and they realized they had better come to some agreement soon.” At the urging of President Grant, the Treaty included an arbitration clause to resolve the claims. The matter was submitted to arbitration in Geneva before a five-person arbitration tribunal. Arbitrators were designated by the heads of state of Britain, the United States, Brazil, Italy, and Switzerland. How did it turn out?  Although in the end they got to keep Canada, Britain had to pay the U.S. $15,500,000 – over $305 million today – and say they were sorry.


Grover Cleveland and the Venezuelan Crisis of 1895

Bet you never heard of the Venezuelan Crisis of 1895, which was a border dispute between the United Kingdom and Venezuela.[2] The real fight was about gold. The dispute escalated into a major crisis with the possibility of armed conflict, and President Cleveland, citing the Monroe Doctrine, intervened to compel the parties to arbitrate the dispute. The parties ultimately agreed to a five-member arbitration panel, consisting of two arbitrators chosen by the U.K., two representing Venezuelan interests – but named by the U.S. – and the neutral chair to be selected by these four arbitrators. The two arbitrators selected by the U.S. were the sitting Chief Justice of the Supreme Court and an Associate Justice, and the chair was a Russian judge and diplomat. The tribunal ultimately held hearings in Paris in 1898, and a year later ruled largely in favor of the Brits. Not to be left out, former President Benjamin Harrison represented Venezuela in the arbitration.


Teddy Roosevelt: Tippecanoe and ADR, too

A believer not only in arbitration, but mediation, too, the first President Roosevelt seemingly coined the phrase “alternative dispute resolution.” While the Hero of San Juan Hill has a reputation for rarely shying away from a fight, TR was actually a firm believer in peaceful conflict resolution. For example, in 1902 he settled via arbitration a financial dispute with Mexico[3] over the Pious Fund of the Californias (don’t ask, but here’s the award). Also, he received the Nobel Peace Prize for successfully mediating the Treaty of Portsmouth, ending the 1904-5 Russo-Japanese war.[4] In fact, the official Nobel Prize Website refers to TR by a nickname you’ve probably never before heard: “Imperialist and Peace Arbitrator.”


“Silent Cal,” the Father of modern arbitration?

How’s that? Before 1925, enforcing predispute arbitration agreements and arbitration awards was very difficult.[5] Parties could walk away from their promise to arbitrate, and arbitration awards were virtually unenforceable. Then the Federal Arbitration Act (“FAA”)[6] was enacted in 1925 and went into effect a year later. The FAA abrogated the existing law, which was based on Common Law hostility to arbitration, made written promises to arbitrate matters involving interstate commerce specifically enforceable,[7] and established very limited judicial review of arbitration awards.[8] The FAA was passed by both houses of Congress, without a dissenting vote, and with the urging of then-Secretary of Commerce, Herbert Hoover.[9] And who do we have to thank in part for the FAA? President Calvin Coolidge, who signed it into law on February 12, 1925.


FDR: another President Roosevelt, another arbitration advocate

During World War II, it was essential that labor peace be maintained to ensure production of war-related materiel. What did FDR do? He reinstated the National War Labor Board to serve as final arbiter of labor disputes. In exchange for giving up their right to strike, the unions gained an impartial arbitration process to resolve their disputes with management. The Board had the Presidents Club written all over it. The original Board was a World War I creation of President Woodrow Wilson. Its first director was none other than former President William Howard Taft.


Barack Obama: I first thought he might be fond of arbitration – but he wasn’t

When he was first elected, I thought President Obama might have a fondness for arbitration. Why? As a young attorney with Davis, Miner, Barnhill & Galland, in Chicago, President Obama in 1994 argued successfully to enforce an NASD arbitration award in the Seventh Circuit in Baravati v. Josephthal, Lyon & Ross, Inc., 28 F.3d 704 (7th Cir. 1994). Alas, the former President did not support arbitration. This is perhaps because the Democrats largely oppose mandatory arbitration, introducing anti-arbitration bills every session of Congress. This lack of support from the former president was demonstrated every so often. For example, as described in more detail below, Mr. Obama signed the Fair Pay and Safe Workplaces Executive Order 13673 in July 2014 barring companies with federal contracts valued at over $1 million from mandating arbitration of Title VII or sexual harassment or assault claims.[10]


The New Stuff: Donald Trump A President who likes and uses arbitration!

As I’ve blogged before, President Trump believes in arbitration and uses the process. In 2012, he won $5 million in a dispute with a former Miss USA contestant who defamed the pageant, which he owned. President Trump in 2015 filed an arbitration claim against NBC after the network cancelled a contract to televise the Miss USA and Miss Universe pageants. He also won an Internet domain name arbitration, back in 2011. And I read in the Indisputably blog that even Mr. Trump’s agreement with campaign volunteers had a predispute arbitration agreement (“PDAA”) giving the campaign the unilateral right to require arbitration of disputes.

Without doubt, President Trump by his actions in 2017 demonstrated that he is pro-arbitration. You can read chapter and verse in my December blog post, A Final Report Card on My 2017 Arbitration Predictions: “Pretty, Pretty, Pretty, Pretty Good! but here are just some examples:


  • The Trump Administration Department of Justice has been switching sides in some court cases, taking pro-arbitration positions against those taken by federal agencies. For example, the Acting Solicitor General last June filed an Amicus Brief siding with the employers and against the National Labor Relations Board[11] in Epic Systems Corp. v. Lewis, 137 S. Ct. 809 (2017), three cases pending at the Supreme Court involving whether the Federal Arbitration Act prevails over the National Labor Relations Act when it comes to enforcing class action waivers in employment arbitration agreements. The case was heard October 2nd, with the DOJ arguing against its own federal agency.[12]


  • Last year, President Trump nominated, and the Senate confirmed Supreme Court Justice Neil Gorsuch.[13] As I blogged a year ago, based on the few cases I found, Judge Gorsuch of the Tenth Circuit appears to have been pro-arbitration. Although he asked no questions at oral argument, the first real test of Justice Gorsuch’s arbitration views will be in Epic Systems.


  • Exercising its authority under the Congressional Review Act (“CRA”), 5 U.S.C. §§ 801-808, the House of Representatives in February passed House Joint Resolution 37, invalidating the Obama-era Fair Pay & Safe Workplaces Regulation issued in August 2016 barring companies with federal contracts valued at over $1 million from mandating arbitration of Title VII or sexual harassment or assault claims. The nullification resolution was then passed by the Senate and signed by President Trump on March 27th, along with several other nullifications. The rule is now rescinded and a like regulation in “substantially the same form” cannot be promulgated thereafter unless specifically authorized by Congress.


  • Acting under authority of Dodd-Frank section 1028, the Consumer Financial Protection Bureau (“CFPB”) in July 2017 published in the Federal Register its Final Arbitration Rule that would have: 1) banned class action waivers in predispute arbitration agreements in contracts for consumer financial goods and services; and 2) required regulated financial institutions to file customer claims and awards data with the CFPB, which the Bureau could publish. The Final Rule went into effect as scheduled last September, with “mandatory compliance for pre-dispute arbitration agreements entered into on or after March 19, 2018.” Alas, the Rule was retroactively nullified November 1, when President Trump signed into law a Joint Disapproval and Nullification Resolution. The Rule is no more.


Also, CFPB Director Cordray stepped down on November 24th and as a parting act named staffer Leandra English Acting Director. Later, President Trump issued a Statement naming OMB Director Mick Mulvaney to the same post, leading to a power struggle and two lawsuits. So far, the President has prevailed in the lawsuits, and in the meantime, Mr. Mulvaney has consolidated power and has reined in the agency.


  • The Obama Department of Labor in April 2016 approved a Fiduciary Standard Rule for those providing investment advice in connection with retirement accounts. The regulation allows for use of a Best Interests Contract (“BIC”) with investors containing a predispute arbitration agreement, but class action waivers are not President Trump on February 3rd ordered the Secretary of Labor to undertake a review of the DOL’s fiduciary rule. The first phase of the fiduciary standard rule went into effect starting June 9th and a second Phase (including the arbitration part) was to be implemented January 2018. The DOL, however, filed a proposal to delay until July 2019 implementation of Phase II of the Fiduciary Rule. The delay became official on November 29 when Notice was published in the Federal Register.[14]


Also, the Department is defendant in Thrivent Financial for Lutherans v. Acosta, No. 0:16-cv-03289, a challenge to the anti-class action waiver part of the rule that was filed September 2016 in the District of Minnesota. On November 3rd, the Court issued an injunction, finding both the likelihood of success on the merits and irreparable injury. District Judge Susan Richard Nelson wrote in her 21-page Opinion and Order: “DOL now concedes that the BIC Exemption’s anti-arbitration condition contravenes the FAA, and asserts that it will not enforce violations of that condition against Thrivent…”


  • The Obama Department of Education in late October 2016 issued final regulations that would have banned mandatory predispute arbitration agreements and class action waivers in college enrollment agreements for schools receiving federal financial aid for student borrowers. The Trump Department published a Notice in June 2017 announcing that it was postponing indefinitely the planned July 1, 2017 effective date of the regulation. Now the DOE in a January 18th Issue Paper submitted in connection with a negotiated rulemaking has proposed allowing arbitration agreements and banning class action waivers but requiring full disclosure


  • The Centers for Medicare and Medicaid Services issued a final regulation in September 2016 banning nursing homes and long-term care facilities receiving federal funds from using mandatory predispute arbitration agreements. This regulation was soon enjoined,[15] and the Obama CMS appealed in early 2017 just before the inauguration. On June 2, 2017, the Trump CMS dropped its appeal and on June 5 published in the Federal Register an amended regulation eliminating the ban on predispute arbitration agreements and establishing fairness requirements for PDAA use.[16]


Conclusion: what’s next?

A year ago, I thought we were entering an era to “Make Arbitration Great Again” (sorry), where making arbitration better and fairer would trump (again, sorry!) getting rid of it. Now, I’m sure!




*George H. Friedman, Chairman of the Board of Directors of Arbitration Resolution Services, Inc. and an ADR consultant, retired in 2013 as FINRA’s Executive Vice President and Director of Arbitration, a position he held from 1998. In his extensive career, he previously held a variety of positions of responsibility at the American Arbitration Association, most recently as Senior Vice President from 1994 to 1998. He is an Adjunct Professor of Law at Fordham Law School. Mr. Friedman serves on the Board of Editors and is a Contributing Legal Editor of the Securities Arbitration Commentator.  He is also a member of the AAA’s national roster of arbitrators.  He holds a B.A. from Queens College, a J.D. from Rutgers Law School, and is a Certified Regulatory and Compliance Professional.


[1] To be absolutely accurate, George Washington was elected in 1789 as the first President of the Constitutional Republic known as the United States of America. In 1781, John Hanson was the first person elected president under the Articles of Confederation, the precursor to the Constitution. He evidently didn’t have a very good press agent.

[2] About what? According to Wikipedia, it had something to do with “Britain’s refusal to include in the proposed international arbitration the territory east of the ‘Schomburgk Line’, which a surveyor had drawn half a century earlier as a boundary between Venezuela and the former Dutch territory of British Guiana.” Hey, you asked.


[3] See


[4] See


[5] See A Brief History of Commercial Arbitration, available at


[6] See 9 U.S.C. §§ 1 et seq., available at


[7] See 9 U.S.C. §§ 1 and 2. Note, too, that almost every state has enacted state arbitration laws covering intra-state commerce.


[8] See 9 U.S.C. § 10.


[9]  See Christopher, Leslie, The Arbitration Bootstrap, 94 Tex. L. Rev. 265 at 303, 305 (2015).


[10] A slightly revised Order was issued in August 2016.


[11] The NLRB issued a Statement on June 16th stating that the Acting Solicitor General had given the Agency authority to represent itself.


[12] See for yourself by reading the oral argument transcript or listening to the audio recording.


[13] See Friedman, G., Supreme Court Nominee Gorsuch Seems to be Pro-Arbitration! (February 2017).

[14] 82 FR 56545 (Vol. 82, No. 228, P. 56545, November 29, 2017)

[15] See American Health Care Association v. Centers for Medicare, No. 3:16-CV-00233 (N.D. Miss. Oct. 17, 2016), which sought an injunction, asserted that CMS exceeded its statutory authority and that the regulation runs afoul of the Federal Arbitration Act. On the eve of the 2016 Presidential election, Judge Michael Mills issued a 40-page decision granting the request for an injunction.


[16] A CMS Factsheet leads with news that the prohibition on PDAAs is out, and then states the proposed regulation adds several requirements for PDAA use.