Courts have long favored arbitration when addressing disputes regarding arbitrability under the Federal Arbitration Act (FAA), and require that such disputes be decided in favor of arbitration. Arbitration is a creature of contract, subject to the same challenges as all contracts, and the FAA pre-empts certain state-law public policy legislation that would prohibit arbitration of specific types of claims. The FAA’s pre-emption of certain state laws led to the impression that arbitration is the preferred means of dispute resolution over all others. However, two recent decisions—Oxford Health Plans v. Sutter, decided by the U.S. Supreme Court, and Hirsch v. Amper Financial Services, decided by the Supreme Court of N.J.—have brought the perceived “preference” for arbitration into focus. In fact, both Oxford and Hirsch are reminders that arbitration is a creature of contract and highlight the limits of arbitrability in situations where a party may not have agreed to arbitrate a dispute.
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