While arbitration clauses are often a topic of concern in the consumer context, they can also be a major issue in sophisticated party transactions as well—the agreements where the arbitration clause is the least of everyone’s worries. In these transactions, whether they be in the employment context or otherwise, arbitration clauses are often treated as a throwaway for which a simple copy-and-paste will do. At that forward-looking time, arbitration seems like a sensible method of dispute resolution between two like-minded people, and it is given little emphasis. When the relationships break down later, as they often do, arbitration clauses become a major issue. Too often, one side wants to be in court while the other does not. They argue whether their dispute is subject to arbitration.

Arbitrability of a claim has been discussed and debated at length. There are many excellent articles relating to arbitrability; the question that asks whether a claim should be arbitrated per the parties’ agreement or litigated in court. Before the arbitrability question is addressed, there is another question that must be answered first: Who decides the arbitrability question? The court or the arbitrator? Depending on who answers the question, the outcome could be different as arbitrators have strong financial incentives to have the dispute before them.

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