The Supreme Court has read the Federal Arbitration Act (FAA) broadly to establish a strong public policy in favor of arbitration, to create a strong presumption in favor of arbitration where there are any doubts or ambiguities in an arbitration agreement, and to preempt state-law limitations on arbitration for contracts involving interstate commerce. But a recent U.S. Court of Appeals for the Eleventh Circuit case, Calderon v. Sixt Rent a Car, 5 F.4th 1204 (11th Cir. 2021), held that the FAA only validates arbitration agreements that arise out of the contract of which they are a part.

While most agreements to arbitrate only require that the parties arbitrate disputes that arise out of the contract, there has been a recent trend by some companies to include broad arbitration provisions requiring arbitration of any dispute between the parties, and in some cases even with affiliate companies. The Calderon decision, however, calls the validity of these broad arbitration provisions into question. It also opens the door to state-law public policy exceptions.

‘Calderon’