Sunday, June 27, 2010

Delegation Provisions in Arbitration Agreements

Last week, in the Lawffice Space entry SCOTUS Addresses Arbitrability Determination, I blogged about that day's Supreme Court decision in Rent-A-Center v. Jackson. For employers, the case should highlight the importance of delegation provisions. The Supreme Court defined a delegation provision as "an agreement to arbitrate threshold issues concerning the arbitration agreement."

Arbitration agreements, like any contract, will vary based on the individual circumstances involved in making the agreement. That said, it may be useful to read the delegation provision at issue in Rent-A-Center (found in-full in the Petitioner's Brief):
The Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including, but not limited to any claim that all or any part of this Agreement is void or voidable.
In Rent-A-Center, the Supreme Court held that delegation provisions are enforceable and employers may compel arbitration of gateway issues under them (unless a party specifically challenges the delegation provision in District Court, then the Court decides).

With that in mind, employers may wish to decide if they want to delegate gateway issues to an arbitrator. If so, employers may wish to check their arbitration agreements to make sure they include a delegation provision.

Posted by Philip Miles, an employment lawyer with McQuaide Blasko in State College, Pennsylvania.