Supreme Court Holds Courts Decide Arbitrability Where Two Contracts Conflict

The U.S. Supreme Court recently held that where parties include conflicting terms in different contracts as to whether a disagreement must be arbitrated, a court, not the arbitrator, must decide whether the parties have agreed to arbitration.

As background, users of a cryptocurrency exchange platform sued the exchange platform, alleging that a sweepstakes issued by the exchange platform violated California’s False Advertising Law, Unfair Competition Law, and Consumer Legal Remedies Act.  The initial user agreement provided that all disputes must be resolved through arbitration, and that matters of arbitrability must be resolved by arbitration as well.  However, the users later entered into a second contract with the exchange platform when they entered the sweepstakes.  The sweepstakes contract contained a forum selection clause requiring all disputes to be brought in California state or federal court.  Thus, there was a conflict between the contracts as to whether a sweepstakes dispute must be arbitrated or brought in court, and whether an arbitrator or court would decide the arbitrability of the agreement. 

The Ninth Circuit affirmed the district court’s denial of the exchange platform’s motion to compel arbitration.  On appeal, the Supreme Court held that because the contracts contained conflicting provisions on how arbitrability should be decided, arbitrability could only be determined by determining which contract applies.  In such cases, the question is whether the parties agreed to send the dispute to an arbitrator, and that question must be answered by a court.  Therefore, the court, not an arbitrator, must decide whether the sweepstakes agreement superseded the user agreement, and in turn, whether the parties had agreed to arbitrate the underlying dispute.