This report is intended to outline and highlight key developments in a very important piece of legislation “Federal Arbitration Act”, also commonly known as FAA. To look in detail at the FAA, developed in late 1925, let's first look at what the word arbitration means. Simply put, arbitration is a very informal, private and isolated process where all participating parties agree to submit their disputes and issues in writing to one or more independent parties who are sanctioned to resolve the problem or issue. If someone asks you a question to define the arbitration act or what it means, most of us will have one of the following opinions:• It is a system that helps private lawsuits rise for various types of corporate disagreements.• An easy tool to remove or improve workplace tensions between management or employer and their employees.• It is also known as a process by which large financial institutions (banks, insurance companies) and several stockbrokers protect themselves from harsh complaints of customers.• A way to level the playing field in decisive marketable disagreements between different multinational organizations operating in different parts of the world (Blankley, 2005). As mentioned briefly above, the FAA was initially developed in 1925, but until 1959 it was only used in five cases, which was a big surprise to most lawmen. All people familiar with the act predicted that it would be a great success and that the FAA would be used regularly. However, in the latter part of the twentieth century there were various Supreme Court verdicts which were later changed from “picturesque. . . procedural statute” in a “national regulatory statute”. In simpler terms......half the paper......financial. However, as the Court established in Allied-Bruce and Southland Corp, the FAA limits the level to which any court and state statute can circumvent the law's specified purpose and limit the rights of involved parties who have reached arbitration agreements (Hayford, 2000). To conclude, the FAA is an intensive set of statuses that has been used in the United States and many other countries over the past few decades. It received a lot of criticism when it was developed and used in the 1930s. But over the past few years the FAA has helped many companies and organizations reach an agreeable agreement not only domestically but globally. More and more companies are considering using the FAA whenever they have disputes with competitors or partners. The FAA is a significant piece of legislation and has worked very well.