The Court narrows the inquiry as to whether a matter is arbitrable to the sole question of whether there is “clear and unmistakable” evidence that the parties “agreed” to submit to arbitration.

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First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995)
 

Relevant Facts: A married couple signed a “workout” agreement on behalf of their business to settle some pending debts. The agreement contained an arbitration provision. When the debt continued to go unpaid, the creditor filed a claim in arbitration against the business and the married couple as individuals. The couple objected to arbitration, claiming that while the business agreed to arbitrate, they never agreed to it as individuals. The arbitrators deemed themselves able to rule on the merits, and did so in favor of the creditor. The district court upheld the arbitration award, but the appellate court reversed, finding that the question of arbitrability was for a court to decide.

 

Question Before The Court: Who decides whether a claim is arbitrable – the court or an arbitrator?

 

The Opinion: The Court held that to determine who decides the question of arbitrability, a court must look to the contract and determine whether the parties addressed the matter directly. If the contract expressly provides for an arbitrator to decide, “then the court’s standard for reviewing the arbitrator’s decision about that matter should not differ from the standard courts apply when they review any other matter that parties have agreed to arbitrate. That is to say, the court should give considerable leeway to the arbitrator, setting aside his or her decision only in certain narrow circumstances. If, on the other hand, the parties did not agree to submit the arbitrability question itself to arbitration, then the court should decide that question just as it would decide any other question that the parties did not submit to arbitration, namely, independently.”

 

According to the Court, “arbitration is simply a matter of contract between the parties; it is a way to resolve those disputes—but only those disputes—that the parties have agreed to submit to arbitration. When deciding whether the parties agreed to arbitrate a certain matter (including arbitrability), courts generally [ ] should apply ordinary state-law principles that govern the formation of contracts. This Court, however, has added an important qualification, applicable when courts decide whether a party has agreed that arbitrators should decide arbitrability: Courts should not assume that the parties agreed to arbitrate arbitrability unless there is ‘clea[r] and unmistakabl[e]’ evidence that they did so.”

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