arbitrability

Issues

The United Kingdom and Argentina signed the Bilateral Investment Treaty in 1990 to promote international investment in Argentina. The Treaty requires that disputes first be submitted to Argentine courts for a certain period before being arbitrated. After the Argentine economic crisis in 2001 and 2002, Argentina enacted several measures that restrained investors from litigating effectively. BG Group filed for arbitration in the United States against Argentina without first submitting the dispute to Argentine courts. After the arbitral tribunal issued an award, Argentina argued that the tribunal had no jurisdiction over the parties. The issue here is whether the arbitrators or the courts should determine whether a precondition for arbitration has been satisfied. BG Group argues that the purpose of international arbitration is to allow experienced arbitrators to decide issues in a neutral forum, not governed by a particular country. Argentina argues that the purpose of arbitration is to give the parties what they agreed to and that judicial review is necessary for securing international treaties. The Supreme Court will determine whether courts or arbitrators decide these threshold questions of arbitrability. This decision will impact the substance of international arbitration agreements and how the United States is perceived as a seat for international arbitration.

Questions as Framed for the Court by the Parties

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Issues

Respondent Antonio Jackson was an employee of Petitioner Rent-A-Center West, Inc. (“RAC”). Jackson sued RAC, alleging racial discrimination. Because Jackson had signed an arbitration clause as part of his employment contract, RAC asked the court to refer the case to arbitration. Jackson, however, argued the employment contract was unconscionable and therefore invalid. The arbitration clause contains a provision that only an arbitrator can decide validity. Jackson argues that a court must decide the validity of the arbitration clause before requiring arbitration. RAC argues that the parties agreed in the contract to submit this question to arbitration. The Ninth Circuit held that, when a party attacks the validity of an arbitration clause because of unconscionability, a court must decide its validity. The Supreme Court’s decision will influence how arbitration clauses will function in the future and the degree of court involvement in arbitration agreements.

Questions as Framed for the Court by the Parties

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