In a 5-4 ruling, the Supreme Court decided Rent-A-Center, West, Inc. v. Jackson on June 21, narrowing the courts’ ability to overturn arbitration agreements. .
When an agreement delegates the authority to determine the arbitrability of the agreement to the arbitrator, claims that challenge the enforceability and validity of an agreement as a whole will be determined by the arbitrator, the high court said.
The court should only handle claims specifically challenging the validity of the agreement to arbitrate, known as the “delegation provision,” the court found.
Because most challenges to the enforceability or validity of an agreement will apply to the entire agreement, and not only to the specific arbitration provision, the Rent-A-Center decision is expected to reduce the number of challenges to arbitration agreements heard in federal court.