The United States Supreme Court recently granted a petition for certiorari to review a Ninth Circuit decision and resolve the issue of whether, when parties enter into an arbitration agreement with a delegation clause, the court or an arbitrator should decide whether that arbitration agreement is narrowed by a later contract that is silent as to arbitration and delegation. A delegation clause specifies that an arbitrator, and not a court, will decide threshold questions about the arbitration agreement, such as the applicability, scope and validity of the agreement.
There is currently a circuit split on the enforceability of delegation clauses: First and Fifth Circuits compel arbitration under the delegation clause so that an arbitrator can decide whether the second contract narrowed the arbitration agreement in the first contract, while the Third and Ninth Circuits refuse to enforce delegation clauses where a second contract narrows an earlier arbitration agreement. This is the second time that the Supreme Court has addressed Petitioner Coinbase’s arbitration clause; in the prior case it reversed the Ninth Circuit, holding that an appeal from a denial of a petition to compel arbitration automatically stays proceedings below.
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