The Supreme Court has ruled that when there are two conflicting agreements—one sending arbitrability disputes to arbitration and the other sending them to the courts—as a threshold matter, a court must decide which contract governs to reach the question of arbitrability.
WHY THIS IS IMPORTANT…In prior decisions, the Supreme Court covered three layers of arbitration disputes: (1) merits, (2) arbitrability, and (3) who decides arbitrability. This dispute touched on a fourth layer—who decides arbitrability when multiple contracts conflict over that question. It found that a decision has to be made by a court as to which contract governs. The Supreme Court recognized that parties are free to put arbitration provisions in their contracts and contracts however they wish. Still, it is a court that must determine what the parties agreed to and what the contract provides when it comes to a dispute on this issue.
Comments