Jurisdiction(s):
United Kingdom

Coinbase v Suski: US Supreme Court confirms courts decide delegation clause challenges and clarifies the severability principle under the FAA, leaving scope versus existence arbitrability issues unresolved

Published on: 28 June 2024

Published by a Law360 reporter

Legal News

Article summary

The doughnut itself

The doughnut itself—namely the first, outer ring—symbolises the parties’ merits dispute, such as a breach of contract claim. That substantive quarrel is not at issue when arbitrability is challenged. It remains untouched in such proceedings. Where a contract between the parties includes an arbitration clause, they may fall out not only over the merits but also over the forum in which the merits should be determined—before arbitrators or in court. For example, one party might insist the court should hear the case because the arbitration clause is invalid, or argue the controversy sits beyond its scope. Such attacks on arbitration clauses are called arbitrability challenges. In the doughnut analogy, they are the hole—the second ring. In 1967, the Supreme Court in Prima Paint Corp v Flood & Conklin Manufacturing Co held that any arbitrability challenge must be aimed ‘specifically’ at the arbitration clause, rather than at the contract that contains it. Put differently, a party cannot sidestep an arbitration clause merely by impeaching the agreement as a whole. This is the ‘severability’ principle: for purposes of validity and enforceability, arbitration clauses are treated as severable from the underlying contract and is assessed on its own terms...

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