Late last week, the Supreme Court handed down an important decision involving the Federal Arbitration Act in Coinbase v. Bielski. The Federal Arbitration Act covers most arbitration clauses. This decision brings new light to the appeals process of arbitration agreements.
Many businesses include arbitration clauses in their agreements because of the relative speed arbitration can provide compared to litigating disputes in court. Sometimes, parties to a contract containing an arbitration clause disagree whether a particular dispute should be heard by an arbitrator or by a judge and jury. The party that does not want to arbitrate may attempt to pick the battlefield first by filing a lawsuit. The party who does want to arbitrate may then file a motion to compel arbitration. By doing so, they are asking the judge to force the parties to resolve their dispute before an arbitrator.
That’s what happened in Coinbase. Mr. Brielski filed a lawsuit against Coinbase, and Coinbase moved to compel arbitration. The trial court denied the motion, and Coinbase appealed the arbitration decision.
While an appeal of the district court’s denial is pending, must the trial court halt all related proceedings? This is the question that the Supreme Court answered in the Coinbase decision.
The Court answered that question “yes.” While arbitration is usually seen as the “faster” option of dispute resolution. However, businesses often overlook the court-related delays that can take place even when their agreements do include arbitration clauses.
A poorly drafted arbitration clause runs the risk of exposing your business to delays that the very same arbitration clause was designed to avoid.
With the new ruling on arbitration appeals, now is a prudent time to contact BFV to ensure that the arbitration provision in your contract is effective and enforceable.