Separability in the United States Supreme Court

Abstract

In a highly predictable decision - but one that is certain nevertheless to elicit considerable commentary - the Supreme Court of the United States has confirmed:

(1) The broad scope of the principle of the separability of the arbitration clause, and

(2) The broad scope of federal legislation overriding any rule of state law to the contrary.

It thus made explicit what should have been clear ever since the well-known case of Prima Paint decided almost 40 years ago: that the doctrine of severability - reserving issues of contract validity to the arbitrator unless the challenge is to the arbitration clause itself - is an integral part of the substantive federal common law of arbitration.

Nevertheless, the rather perfunctory, desultory discussion of the problem by Justice Scalia, or by his law clerk - and some unfortunate choice of language in the opinion - is likely to create continuing problems for lower courts that have routinely failed to grasp the point of the separability doctrine. This short paper is an attempt to rationalize the subject.

Keywords: arbitration, dispute resolution, separability, arbitrators and courts

JEL Classification: D74, F23, K12, K40, K41