SCOTUS Rejects Exception to Compelling Arbitration

A unanimous decision of the Supreme Court finds that when an arbitration agreement delegates threshold arbitrability questions to an arbitrator, a court may not decide arbitrability questions, even if the court thinks that the argument for arbitration is “wholly groundless.”

The decision, which resolves a split of opinion among several circuit courts, holds that, where the contract clearly and unmistakably delegates the issue of scope to an arbitrator, the court should compel the parties to arbitration.

Circuits Split Over the “Wholly Groundless” Exception

When parties disagree over whether an arbitration agreement applies to a particular dispute, the court may decide the issue of scope, unless there is a delegation clause present. A delegation clause delegates authority to an arbitrator, instead of the court, to decide issues of scope. Ordinarily, when a delegation clause is present, courts have compelled the parties to arbitration for the arbitrator to rule on the threshold issues of arbitrability.