The U.S. Supreme Court has been actively shaping the landscape of arbitration through its recent decisions. These rulings have significant implications for the interpretation and reach of the Federal Arbitration Act (FAA) and offer crucial guidance for drafting arbitration provisions to avoid prolonged litigation. Exploring the evolution of Supreme Court rulings on arbitration agreements reveals a dynamic interpretation of the Federal Arbitration Act and its application.

This analysis draws on several key cases: Henry Schein, Inc. v. Archer and White Sales, Inc., New Prime Inc. v. Oliveira, Lamps Plus, Inc. v. Varela, GE Energy Power Conversion France SAS v. Outokumpu Stainless USA LLC, and the most recent Coinbase, Inc. v. Suski. These rulings significantly impact whether and when a party may resolve disputes in the arbitral forum and offer guidance on drafting effective arbitration provisions to avoid prolonged litigation on issues of arbitrability, ultimately influencing the likelihood of a successful motion to compel arbitration.

The Role of Arbitrability: Henry Schein, Inc. v. Archer and White Sales, Inc.
In the landmark case of Henry Schein, Inc. v. Archer and White Sales, Inc., the Supreme Court reinforced the principle that courts must respect the parties' agreement to arbitrate questions of arbitrability. The case revolved around whether courts could decide arbitrability issues when the arbitration agreement clearly delegated these questions to the arbitrators.

Key Findings:

• The Supreme Court rejected the "wholly groundless" exception, emphasizing that if there is "clear and unmistakable evidence" that parties agreed to arbitrate arbitrability issues, this agreement must be honored.

• On remand, the Fifth Circuit found that the arbitration clause did not clearly delegate arbitrability to the arbitrator due to a specific exclusion for actions seeking injunctive relief.

This decision underscores the importance of precise and unequivocal drafting in arbitration agreements to ensure that all intended disputes are covered.

Expanding the Scope of Employment: New Prime Inc. v. Oliveira

In New Prime Inc. v. Oliveira, the Supreme Court tackled the scope of the FAA's exemption for "contracts of employment" for transportation workers, including independent contractors. The Court held that this exemption must be determined by courts before compelling arbitration, even if the parties have delegated arbitrability to the arbitrator.

Key Findings:

• The term "contracts of employment" was interpreted broadly to include agreements with independent contractors.

• This decision impacts the "gig economy," where companies like Uber and Lyft face challenges from drivers claiming the FAA exemption.

This ruling illustrates the Court's adherence to historical context in statutory interpretation and its implications for modern employment relationships.

Class Arbitration and Consent: Lamps Plus, Inc. v. Varela

Lamps Plus, Inc. v. Varela addressed whether ambiguous arbitration agreements could authorize class arbitration. The Supreme Court, in a split decision, concluded that ambiguity does not provide a sufficient contractual basis for class arbitration.

Key Findings:

• Arbitration must be a matter of explicit consent, and the fundamental differences between individual and class arbitration require clear agreement.

• Courts have since reinforced this principle, rejecting class arbitration where agreements are silent or ambiguous on the matter.

This decision highlights the necessity for clear language in arbitration agreements to prevent unintended class arbitration.

International Arbitration and Nonsignatories: GE Energy Power Conversion France SAS v. Outokumpu Stainless USA LLC

The upcoming case GE Energy Power Conversion France SAS v. Outokumpu Stainless USA LLC presents the question of whether the New York Convention allows nonsignatories to compel arbitration. This case will address the intersection of international arbitration agreements and the FAA.

Key Considerations:

• The New York Convention typically requires written agreements for arbitration, but the issue of nonsignatory enforcement is complex.

• The Eleventh Circuit ruled that nonsignatories could not compel arbitration under the Convention, emphasizing the need for explicit agreements.

The arbitration community awaits the Supreme Court's decision, which will have significant implications for international arbitration practices.

Conflicting Agreements: Coinbase, Inc. v. Suski

In the recent Coinbase, Inc. v. Suski decision, the Supreme Court unanimously held that courts, not arbitrators, must decide arbitrability when there are conflicting arbitration provisions in multiple agreements. This case involved a dispute between Coinbase and its users, who had conflicting arbitration and forum selection clauses in different agreements.

Key Findings:

• The Court emphasized traditional contract principles, stating that courts must determine which contract controls the dispute.

• This decision clarifies that arbitration agreements are subject to the same interpretive rules as other contracts and that multiple agreements must be reconciled by courts to determine the parties' intent.

This ruling reinforces the importance of consistency in contractual dispute resolution provisions and the role of courts in resolving fundamental questions of arbitrability.

Practical Implications for Contracting Parties

These decisions collectively emphasize the Supreme Court's commitment to the principles of consent and clarity in arbitration agreements. For contracting parties, the following best practices are essential:

1. Clear Delegation Clauses: Explicitly state whether questions of arbitrability are to be decided by arbitrators.

2. Consistent Agreement Terms: Ensure that all related agreements are harmonized to prevent conflicting provisions.

3. Specific Exclusions: Clearly outline any exceptions to arbitration to avoid ambiguity.

4. Awareness of Exemptions: Understand the scope of statutory exemptions, particularly in the context of employment and independent contractor agreements.

5. Class Arbitration Clarity: Explicitly address the permissibility of class arbitration within the agreement.

Conclusion

The Supreme Court's recent arbitration decisions highlight the evolving nature of arbitration jurisprudence and the Court's role in interpreting the FAA. These rulings provide critical guidance for drafting effective arbitration agreements and underscore the importance of consent and clarity in resolving disputes. As arbitration continues to be a favored method of dispute resolution, staying abreast of these legal developments is crucial for practitioners and contracting parties alike.