The U.S. Supreme Court has granted a certiorari petition from Goldman Sachs Bank, adding a significant arbitration dispute to its docket for the 2026-27 term. The case, Goldman Sachs Bank USA v. Brown, revolves around whether a bankruptcy court has the authority to override the Federal Arbitration Act by refusing to enforce arbitration agreements in the context of bankruptcy proceedings.
The genesis of this dispute dates back three years to a bankruptcy filing by Rhea Brown and Gregory Maze. Their adversary proceeding alleges that Goldman Sachs willfully violated the automatic stay provision of the U.S. Bankruptcy Code by persistently attempting to collect credit card debts post-filing. Despite the presence of an arbitration clause in their credit agreements, both the bankruptcy court and the U.S. Court of Appeals for the 4th Circuit denied the bank’s motion to mandate arbitration, affirming that doing so would interfere with the Bankruptcy Code’s objectives.
In seeking Supreme Court review, Goldman Sachs posited that the 4th Circuit’s ruling contradicts prior decisions, particularly from the U.S. Court of Appeals for the 2nd Circuit, thereby creating a split in the interpretation of arbitration’s applicability in bankruptcy contexts. The bank underscored the broad implications of this case, given the extensive use of arbitration clauses in consumer credit agreements. Specifically, Goldman Sachs argued that the 4th Circuit’s decision threatens the enforceability of these agreements across similar cases.
This latest development signifies the Supreme Court’s willingness to delve into complex intersections of bankruptcy and arbitration law, potentially impacting how arbitration clauses are treated under the automatic stay provision. Oral arguments are slated for next year, with a ruling anticipated by mid-summer.