ALF Urges Supreme Court To Enforce Arbitrator Delegation Clause
The Supreme Court repeatedly has recognized that the Federal Arbitration Act, 9 U.S.C. § 1 et seq., embodies a strong federal policy requiring judicial enforcement of private-party agreements to resolve disputes through binding arbitration, which usually is speedier, more efficient, and less expensive than litigation. To facilitate these benefits, arbitration agreements often contain a “delegation clause” that assigns threshold questions of arbitrability to the arbitrator.
In Coinbase v. Suski, No. 23-3, the Supreme Court will address whether courts must respect the parties’ decision to delegate questions of arbitrability to the arbitrator when a later contract does not address arbitration or delegation. The arbitration agreement at issue, including its delegation clause, was part of a subsequently modified User Agreement between the Coinbase crypto-currency exchange and Coinbase account holders. The account holders have filed a putative class action challenging the manner in which Coinbase conducted a sweepstakes. The Ninth Circuit affirmed a district court’s denial of Coinbase’s motion to compel arbitration.
ALF has filed an amicus brief urging the Court to uphold the arbitration agreement’s delegation clause. The brief was authored by Felix Shafir, John F. Querio, and Scott P. Dixler of Horvitz & Levy LLP.
Where parties enter into an arbitration agreement with a delegation clause, should an arbitrator or a court decide whether that arbitration agreement is narrowed by a later contract that is silent as to arbitration and delegation?
ALF’s Amicus Brief:
ALF’s amicus brief argues that by declining to enforce the arbitration agreement’s delegation clause, the Ninth Circuit has subjected the parties to the very type of litigation that they agreed to avoid. The brief explains that delegating disputes over arbitrability to the arbitrator is a common way of streamlining dispute resolution. But that objective is defeated, and the Federal Arbitration Act is violated, where as in Coinbase, questions about the validity and scope of an arbitration provision are delegated to the arbitrator but adjudicated by a court.
Status:
On May 23, 2024 the Court issued an opinion holding that courts, not arbitrators, must decide whether the parties’ second agreement superseded their first agreement as to who decides arbitrability issues.
Contact:
Email ALF Executive Vice President & General Counsel Lawrence Ebner.
