On January 8, 2019, the Supreme Court of the United States found that when arbitration agreements delegate to the arbitrator the question of whether a dispute is arbitrable or is subject to the arbitration contract, that contract language must be followed.
In a strict interpretation of the Federal Arbitration Act (FAA), and following prior case law, the Court rejected the “wholly groundless” exception advanced by parties opposing arbitration. The“wholly groundless” exception has gained traction in courts endorsing the argument that it is wholly groundless to claim that the subject matter of a dispute is covered in an arbitration agreement.
In Henry Schein, Inc. v. Archer & White Sales, Inc., Judge Kavanaugh stated that there is no such exception in the FAA, and the Court cannot rewrite that Act. The takeaway is that all arbitration contracts should include clear language that delegates the arbitrability question to an arbitrator.