What to do when arbitration agreements have conflicting provisions?

This is another case that interprets the Federal Arbitration Act. Courts usually defer to management on arbitration disputes, as the national policy is to respect arbitration agreements unless there was deception on management's part or the employee can find a loophole that favors her position and allows her to keep the case in court rather than arbitration, where, let's face it, cases are less likely to succeed than in court. This case has a loophole.

The case is Coinbase, Inc. v. Suski, issued by the Supreme Court on May 23. In this case, there were two arbitration agreements. The first said that an arbitrator determines all disputes under the arbitration agreement, including whether a given dispute is even arbitrable or whether it needs to be decided in court. The second agreement says that all disputes related to the first contract must be decided in California courts. The Ninth Circuit said the second contract's forum selection clause superseded the prior agreement. Here is the question posed by this case: when two such contracts exist, who decides the arbitrabilty of a contract between the parties: -- an arbitrator or the court? (Another question, not resolved by this case, is how the parties wound up signing contradictory arbitration clauses).

This is a tricky case but it yields a unanimous ruling from the Supreme Court, which is probably spending most of its time dealing with blockbuster cases that will be decided by the end of June, such as whether the President enjoys immunity from criminal prosecution. But the mundane cases still must be decided. This is not mundane if you handle cases in arbitration, however, and the Court took this case because it wanted to clarify this legal issue.

The Court starts off this way: "In prior cases, we have addressed three layers of arbitration disputes: (1) merits, (2) arbitrability, and (3) who decides arbitrability. This case involves a fourth: What happens if
parties have multiple agreements that conflict as to the third-order question of who decides arbitrability? As always, traditional contract principles apply."

The short answer is that "before either the delegation provision or the forum selection clause can be enforced, a court needs to decide what the parties have agreed to — i.e., which contract controls." This holding draws from basic contract law principles. "When we home in on the conflict between the delegation clause in the first contract and forum selection clause in the second, the question is whether the parties agreed to send the given dispute to arbitration—and, per usual, that question must be answered by a court." What it means in plain English is that the lower courts have to decide what the parties actually agreed to.