The recent United States Supreme Court decision in AT&T Mobility LLC v. Concepcion, heralded by many as a win for business over the consumer, actually was an affirmation of agreements to arbitrate disputes under federal law.
The Court found that the Federal Arbitration Act preempted state law that negated an arbitration provision in this instance. The Supreme Court noted that the “overarching purpose” of the Federal Arbitration Act was to “ensure the enforcement of arbitration agreements according to their terms . . . .” The Court affirmed that contracts that provide for resolution of disputes by arbitration are enforceable and are supported by “a “liberal federal policy favoring arbitration.” This liberal policy applies whether the contract is between two businesses, even if of unequal negotiating strength, or between a business and a consumer.
Thus, if a party favors dispute resolution through arbitration there is now an extremely high expectation that a properly phrased arbitration preference in an agreement will be enforced. All that is required is a clearly worded clause that establishes an agreement to arbitrate any dispute related to the contractual relationship. Whether such an agreement is advisable and what other provisions might be included are topics for future posts.