The Developing American Approach to Arbitrability - Dispute Resolution Journal - Vol. 58, No. 1
The author is a partner in the New York City offices of Jones Day, and teaches Arbitration Law at Brooklyn Law School. The views expressed are solely those of the author and should not be attributed to the author’s firm or its clients.
Originally from Dispute Resolution Journal
The concept of “arbitrability” is critical to any effective arbitration system. There must be a way to determine whether parties have agreed to arbitrate, which parties have agreed to arbitrate, what issues are subject to arbitration, and many related issues. In this article, the author traces the development of the concept of arbitrability in the United States to the present day, including the latest Supreme Court pronouncements on the subject. He places American arbitrability law in the context of developments in other countries and suggests the likely direction that American arbitrability law will take in the future.
The power to determine whether an arbitration proceeding has been properly commenced and the breadth of the issues subject to arbitration, and whether any public policy concerns limit the ability of an arbitrator to resolve a dispute—all of these (and more) may be called matters of “arbitrability.” The resolution of such matters can greatly affect the conduct of an arbitration proceeding. Indeed, arbitrability may be the ultimate trump card in arbitration. If arbitrability issues may be raised in court proceedings before the arbitration can be completed, the arbitration process may be halted or disrupted even before it really begins. And, if a court may freely review arbitrability issues once an arbitration proceeding is complete, then the arbitration may prove to have been a waste of time and effort; the arbitration results, even if otherwise fair and just, may be undone on grounds of “inarbitrability.”
In the opposite direction, if issues of arbitrability cannot be addressed by a court until after an arbitration proceeding is complete, and if a court’s review of arbitrability issues must necessarily be limited, then there is a risk that arbitrators will overreach, and litigants may be unjustly subjected to arbitration. As a result, confidence in the arbitration process may be undermined.
With so much at stake, one might expect that clear rules to determine arbitrablity would be established by legislative action or definitive judicial rulings. Yet, in this area, the rules have developed slowly, with much less predictability than in many other areas of arbitration law. Nevertheless, American arbitrability law today is clearer, and more certain, than ever before.
This article briefly charts the course of the developing law of arbitrability in the United States. The first section examines the various potential meanings of the term “arbitrability,” as used by courts, arbitrators and practitioners. The second section reviews a few of the major Supreme Court pronouncements on the subject of arbitrability. The third section considers legislative and rules-based responses to the arbitrability question. The last section outlines potential future developments in the area of arbitrability, noting in particular the extent to which U.S. law in this area has harmonized with the law in other countries.