In a noteworthy development, the United States Ninth Circuit Court recently upheld the validity of a clause delegating authority to arbitrate, even if the larger arbitration agreement is null and void. This ruling emphasizes the standing of the delegation clause as an individual agreement that is separate from, and not contingent upon, the overall enforceability of the broader arbitration agreement.
This ruling came out of the case of Caremark LLC v. Chickasaw Nation. Parties to an arbitration agreement sometimes elect to incorporate a delegation clause. This provision entrusts the arbitrator, not a court, with “gateway” questions of arbitrability. These encompass queries regarding the application of the agreement to a given controversy or the enforceability of the arbitration provision in its entirety.
This decision from the Ninth Circuit essentially instructs that the delegation clause can stand alone as a distinct contract. As such, inquiries regarding its enforceability or applicability to a specific dispute would fall under the purview of an arbitrator, not that of the court. Consequently, even if the broader arbitration agreement is declared unenforceable, the delegation clause can potentially remain intact – a point worth noting for all legal professionals drafting arbitration agreements.
For a more detailed account of this case and its potential implications for arbitration agreements, kindly refer to the article on the JD Supra website.