Arbitration is a creature of contract. In the arbitration provision of a business contract, the broadly stated terms—such as “the resolution of all such disputes shall be determined by arbitration in accordance with the rules of [an arbitral entity such as] the American Arbitration Association (AAA)”—are no longer clear enough to grant the arbitral panel, rather than the federal court, the jurisdiction to rule on issues of class-action arbitrability.
In a precedential ruling, the U.S. Court of Appeals for the Third Circuit’s decision in Chesapeake Appalachia v. Scout Petroleum, 809 F.3d 746 (2016), cautions that companies should state the terms in the arbitration provision of a contract. Key terms include whether claims such as class actions are subject to arbitration and, in the event of a dispute, the forum where the issue of arbitrability will be determined—either from the federal court or from the arbitral panel. Significantly, the Third Circuit established the rule that, absent “clear and unmistakable” terms stating that the arbitral panel rules on the issue of class-action arbitrability, then the federal court rules on this issue.
Significance
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
