June 01, 2016 Articles

The Court, Not the Arbitrator, Decides the Validity of an Agreement Containing an Arbitration Clause

By Komal Chokshi

Sometimes the end of the arbitration is not the end of the dispute. A party prevailing in arbitration is not out of the woods, given that the underlying contract can still be challenged under traditional defenses to the formation of contract and a court, not an arbitrator, determines the enforceability of a contract under California law. 

The case of Sheppard v. J-M Manufacturing Co., 2016 Cal. App. LEXIS 69 (Jan. 29, 2016), grapples with and clarifies the role of the courts in determining the fate of arbitration clauses in situations where the validity of the underlying contract is under attack. The California Court of Appeal made it clear that determining the validity of the contract is the forte of the courts and not an arbitrator. 

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