Hmm, I wish I knew more about USA law. Reading about arbitration, I had thought that Kavanaugh (yep, that one) in his first ruling, had determined that the terms of the original contract determined who decided whether the matter was 'arbitrable'. Which in the Estate case, I had assumed was the arbitrator (
any dispute... to be submitted for binding arbitration before a retired judge of the Supreme Court. The retired judge shall conduct the arbitration.).
BUT I don't think this (original HBO) contract explicitly states who shall decide if the matter is 'arbitrable'. (If it does, I con't see where it says this). We really need to see the Estate vs HBO transcript to know why these decisions were made. It looks rather 'finely balanced' for the Estate at the moment. I hope that the Court hearing on the 24th June doesn't decide that the case for arbitration is 'wholly groundless'.
I'm surprised that the fans in court were so upbeat on the first hearing at last week's decision, as the written decision mentions that a 'temporary decision' was discussed in court.
This is the recent ruling on 'arbitrability' that I was reading about:
Key Points
The Supreme Court held that, under the Federal Arbitration Act (FAA), courts must enforce arbitration contracts according to their terms, including provisions authorizing arbitrators to decide “gateway” questions of arbitrability.
The Court also held that there is no exception to this rule when a party contends that an arbitration demand is wholly groundless.
Background
Archer & White Sales, Inc., a dental equipment distributor, sued competitor Henry Schein, Inc., alleging violations of the Sherman Antitrust Act and various parallel state laws, and seeking monetary damages and injunctive relief.
Schein moved to compel arbitration. Archer opposed on the grounds that the arbitration agreement exempted actions seeking injunctive relief. Schein responded that the “main thrust” of the litigation was for monetary damages, so the matter was subject to arbitration.
The 5th Circuit’s Opinion
The question raised is one of “arbitrability”—
Is the dispute subject to arbitration or not? The 5th Circuit applies a two-part test. The first step is to determine whether the parties had a clear and unmistakable agreement to arbitrate the claims at issue. If they did, then the motion to compel arbitration is granted in “almost all cases.” However, the second step is to determine whether the argument that the claim is arbitrable is “wholly groundless.” If it is, then the court should decide the question of arbitrability.
The Fifth Circuit found that the argument that the claim at issue was within the scope of the arbitration agreement was “wholly groundless,” so the court should decide arbitrability.
The U.S. Supreme Court’s Opinion
In a unanimous opinion written by Justice Kavanaugh (his first written opinion on the Court), the Supreme Court reversed. The Court reasoned, “We must interpret the [FAA] as written, and the [FAA] in turn requires that we interpret the contract as written. When the parties’ contract delegates the arbitrability question to an arbitrator, a court may not override the contract.”
Archer made several arguments in favor of having courts deciding arbitrability—the Court rejected all of them:
First, Archer argued that courts should always decide “threshold” questions of arbitrability (never arbitrators). The Court found that that argument had already been rejected in Rent-A-Center, West, Inc. v. Jackson1 and First Options of Chicago, Inc. v. Kaplan.2
Second, Archer argued that §10 of the FAA—which provides for judicial review of an arbitrator’s decision if an arbitrator has “exceeded” his or her “powers”—supports the conclusion that the court should also be able to say that the underlying issue is not arbitrable at the outset. The Court found that this interpretation was inconsistent with the way Congress wrote the FAA and declined to “rewrite” it.
Third, Archer argued that it would be wasteful to send “wholly groundless” arbitration demands to arbitrators. However, the Court recognized that the FAA itself does not have a “wholly groundless” exception and declined to “engraft its own exceptions onto the statutory text.”
Finally, Archer argued that this exception is necessary to deter “wholly groundless” motions to compel arbitration. The Court rejected this policy argument, finding that it overstates the problem because arbitrators are capable of efficiently disposing of frivolous cases and deterring frivolous motions, including imposing fee-shifting and cost-shifting sanctions.
The Court remanded for determination of whether the contract, in fact, delegated issues of arbitrability to an arbitrator.
Conclusion
The lesson of Schein is that the terms of arbitration agreements matter. You must make it clear whether you want an arbitrator or court to decide an issue, including whether a dispute is arbitrable.
https://www.akingump.com/en/news-in...ts-can-control-who-decides-arbitrability.html
