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Arbitration Agreement Case Laws

Arbitration Agreement Case Laws: Understanding Rights and Obligations

Arbitration is a process of settling disputes outside of the traditional court system. An arbitration agreement is a contract that binds parties to resolve disputes through arbitration instead of going to court. Such an agreement is legally binding, and in case of a dispute, the parties must submit to arbitration.

Arbitration agreement case laws are essential for understanding the rights and obligations of parties involved in arbitral disputes. These case laws guide the arbitration process, provide clarity on the responsibilities of parties, and help to resolve disputes efficiently.

In recent years, arbitration agreement case laws have gained significant prominence, especially in the context of employment agreements. Employers often include arbitration agreements in employment contracts as a means of avoiding costly and time-consuming litigation in the event of disputes.

One of the key cases that shaped the arbitration agreement landscape is the 2018 US Supreme Court decision in Epic Systems Corp. v. Lewis. The decision confirmed the enforceability of mandatory arbitration agreements and class action waivers in the employment context. It held that the Federal Arbitration Act (FAA) supersedes state laws that prohibit such agreements. This means that employers can require their employees to settle disputes through arbitration instead of litigation, and waive their right to participate in a class action lawsuit.

Another important case is Rent-A-Center, West, Inc. v. Jackson (2010), which established the principle that an arbitrator, not a court, should decide the enforceability of an arbitration agreement when it contains a delegation provision. A delegation provision is a clause in the arbitration agreement that delegates the power to decide enforceability to the arbitrator. This decision has been widely interpreted as meaning that courts should respect the parties` choice to resolve disputes through arbitration, even if the arbitration agreement is subject to challenge.

Recently, the Ninth Circuit Court of Appeals issued a decision in Dorman v. The Charles Schwab Corporation (2019) that shed light on the impact of Federal and state law on arbitration agreements. The decision held that a provision in an arbitration agreement that waives employees` ability to pursue state law claims in court is illegal under California law. The court held that the FAA cannot preempt a state law that prohibits the waiver of a substantive right.

In conclusion, understanding arbitration agreement case laws is essential for parties involved in arbitral disputes. These laws provide clarity on the rights and obligations of parties, guide the arbitration process, and help to resolve disputes efficiently. Employers should ensure that their arbitration agreements comply with applicable state and federal laws, and employees should seek legal advice if they have any doubts about their rights under the agreement.