Arbitration About Arbitration
66 Pages Posted: 21 Mar 2017 Last revised: 30 Jul 2017
Date Written: March 19, 2017
The U.S. Supreme Court’s interpretation of the Federal Arbitration Act (“FAA”) has nearly eliminated consumer and employment class actions, sparking vigorous debate. Yet another important development in federal arbitration law has flown largely beneath the radar. Traditionally, judges granted motions to compel arbitration only after confirming that the parties formed a valid agreement to arbitrate that applies to the underlying lawsuit. But now, through the use of “delegation clauses,” businesses are giving arbitrators the exclusive power to decide these issues. Increasingly, critical questions about the arbitration — including whether the process is fair — are being resolved in arbitration.
This Article gives this trend the attention it deserves. It demonstrates that courts once regarded agreements to arbitrate about arbitration with greater skepticism than agreements to arbitrate the merits of a case. However, in 2010, a U.S. Supreme Court decision called Rent-A-Center West, Inc. v. Jackson seemed to cast doubt on this distinction by opining that delegation clauses are their own freestanding arbitration clauses: (1) agreements to arbitrate disputes (2) over the broader agreement to arbitrate the underlying complaint. Seen this way, delegation clauses are entitled to the same extraordinary deference enjoyed by conventional arbitration provisions.
The Article challenges this account of delegation clauses. Drawing on the FAA’s text and history, and reading Rent-A-Center carefully, it argues that agreements to arbitrate the scope or enforceability of an arbitration clause should not enjoy the same exalted status as agreements to arbitrate substantive claims. Instead, delegation clauses should be understood as watered-down arbitration clauses that are more amenable to regulation than industrial-strength agreements to arbitrate a cause of action. Finally, the Article explains how its thesis would help resolve many of the questions about arbitral power that are currently dividing courts.
Keywords: delegation clause, arbitration clause, Federal Arbitration Act, Rent-A-Center West, Inc. v. Jackson, wholly groundless, arbitrability, separability
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