This article is provided for educational and informational purposes only. It does not constitute legal, financial, or tax advice, and no attorney-client relationship is formed by reading it. Laws, regulations, official guidance, and related information vary by jurisdiction, change frequently, and may have changed or become outdated since publication. Always verify current information with authoritative sources and consult a qualified professional about your specific circumstances. The author and publisher assume no liability for actions taken based on this information.
- Agreement comes before arbitration
- The Federal Arbitration Act supplies an enforcement framework
- Scope asks which disputes the parties assigned
- Class treatment requires a contractual basis
- Waiver concerns litigation conduct
- Federal law contains express exceptions
- An award is not the same as an ordinary trial judgment
- Sources
Key Facts
- Federal and state: An arbitration agreement is a contract to submit specified disputes to a private decision-maker instead of litigating them in court.
- Federal level: FAA Section 2 makes covered written arbitration agreements enforceable, subject to generally applicable grounds for revoking a contract and statutory exceptions.
- Federal and state: Courts ordinarily decide whether an arbitration agreement was formed, while a clear delegation clause can assign certain enforceability or scope questions to the arbitrator.
An arbitration agreement is an agreement to resolve specified disputes through arbitration. An arbitrator hears the parties’ positions and issues a decision, while the agreement defines which disputes and procedures are covered.
Agreement comes before arbitration
Arbitration rests on consent expressed through contract. Ordinary state-law principles govern whether the parties formed an agreement, subject to federal rules that prevent arbitration agreements from being singled out for disfavored treatment.
The agreement may be a stand-alone document or an arbitration clause inside a larger contract.
A dispute about the main contract is not always a dispute about the arbitration provision itself. The separability doctrine treats an arbitration provision as distinct for certain enforcement questions, while a challenge specifically directed at formation of the arbitration agreement remains for judicial determination.
The Federal Arbitration Act supplies an enforcement framework
Section 2 of the FAA covers a written arbitration provision in a maritime transaction or contract involving commerce, as well as a written agreement to arbitrate an existing controversy arising from such a transaction. It declares the agreement valid, irrevocable, and enforceable except on grounds that exist in law or equity for revoking any contract or as otherwise provided in Chapter 4.
This saving clause preserves grounds that apply to revocation of contracts generally.
Enforcement still begins with whether a valid arbitration agreement exists and whether the dispute falls within that agreement.
Scope asks which disputes the parties assigned
Scope turns on the agreement’s words. A clause may cover claims “arising under” a contract, broader claims “relating to” the relationship, or only listed categories.
Parties can also agree to delegate gateway questions about enforceability, validity, or scope to the arbitrator. A delegation clause does not eliminate the antecedent judicial question whether the parties formed the contract that contains it.
In Coinbase v. Suski, the Supreme Court held that a court had to decide which of two contracts controlled where one contained arbitration and delegation language and a later agreement contained a court forum-selection clause. The decision reinforces that delegation depends on what the parties actually agreed to.
Class treatment requires a contractual basis
Individual arbitration and class arbitration are materially different procedures. In Lamps Plus v. Varela, the Supreme Court held that ambiguity could not supply the necessary contractual basis for compelling class arbitration under the FAA.
Waiver concerns litigation conduct
In Morgan v. Sundance, the Supreme Court rejected an arbitration-specific federal rule requiring proof that the opposing party was prejudiced before waiver could be found.
Federal law contains express exceptions
The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act added Chapter 4 to Title 9. At the election of a person alleging a covered sexual-assault or sexual-harassment dispute, Section 402 makes a predispute arbitration agreement or predispute joint-action waiver unenforceable with respect to a case relating to that dispute.
Section 402 assigns questions about Chapter 4’s applicability, and the validity and enforceability of an agreement to which it applies, to a court even if the agreement contains delegation language. The chapter applies to disputes or claims arising or accruing on or after March 3, 2022.
Other federal statutes can create additional subject-specific rules, so “FAA-covered” is a legal classification rather than a label the agreement can conclusively choose.
An award is not the same as an ordinary trial judgment
Judicial review of an award follows the statutory framework rather than a general rehearing of the merits.
FAA Section 9 provides a confirmation process when the agreement permits judgment on the award. Sections 10 and 11 identify limited grounds for vacating, modifying, or correcting an award.
The meaning of an arbitration agreement therefore has several layers: formation, scope, delegation, procedure, statutory coverage, exceptions, and post-award enforcement. Reading only the sentence that says “arbitration” can miss the provisions that determine how those layers operate.
