Who Determines if a Dispute Is Arbitrable?
Parties drafting arbitration clauses should affirmatively select who decides questions of arbitrability.
November 16, 2017 at 04:09 PM
4 minute read
Karen Chesley of Boies Schiller Flexner.
Suppose that in 1980, two parties entered into a contract to buy cassette tapes with an arbitration clause incorporating the American Arbitration Association (AAA) rules for disputes related to that contract.
The parties eventually terminate the cassette contract and create a new contract to purchase computers that does not require arbitration. Years later, a dispute over the sale of those computers arises, and the defendant seeks to compel arbitration under the defunct 1980 agreement.
Who determines whether the dispute is arbitrable? A circuit split leaves the answer unclear, meaning contracts must clearly identify whether a judge or arbitrator decides arbitrability or risk uncertain results.
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