June 16, 2014 Articles

Arbitrating Arbitrability with Nonsignatories

By Tom Alan Cunningham

The right to arbitrate a dispute is a right that arises out of a contract. AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1746 (2011).The Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) prescribes the gatekeeping role of the courts in the implementation of these contract rights. Section 3 requires the court to refer arbitrable issues to arbitration, and § 4 requires the court to compel arbitration upon finding that an arbitration agreement exists and has not been performed. Either way, the courts apply sovereign power to require parties to arbitrate according to their agreement. The courts indulge a presumption of arbitrability because the FAA embodies a national policy favoring arbitration. United Steelworkers of America v. Warrior & Gulf Nav. Co.,363 U.S. 574 (1960).

Determining Arbitrability
Under the FAA, determining arbitrability requires the court to address two issues: (1) whether a valid agreement to arbitrate exists, and (2) whether a party to the agreement has failed to arbitrate. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967). This includes deciding whether a particular issue falls within the scope of the agreement to arbitrate. PaineWebber, Inc. v. Bybyk, 81 F.3d 1193, 1198 (2d Cir. 1993). These gateway decisions are questions about "arbitrability," which are viewed as questions to be decided by the court and not an arbitrator. John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (1964); Atkinson v. Sinclair Refining Co., 370 U.S. 238, 241 (1962).

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