Supreme Court Allows Arbitrators to Determine Validity of Arbitration Agreements, Strengthening Enforcement

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In a decision potentially affecting how a wide variety of arbitration agreements are enforced, on June 21, 2010, a narrowly-divided U. S. Supreme Court—in Rent-A-Center, West, Inc. v. Jackson1—held that, under the Federal Arbitration Act (FAA), arbitration agreements delegating to an arbitrator the ability to rule upon the validity of the arbitration agreement itself can be enforced without prior judicial review. Under the Supreme Court’s ruling, unless the party attempting to avoid arbitration raises a challenge going specifically to the validity of the delegation provision, the arbitrator (rather than a court) has the power to decide whether the agreement is enforceable.

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Published In: Alternative Dispute Resolution (ADR) Updates, General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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