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Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator. A contract need not contain an express delegation clause to meet this standard. An arbitration agreement that incorporates the American Arbitration Association Rules (AAA) presents clear and unmistakable evidence that the parties agreed to arbitrate arbitrability. Under AAA Rule 7(a), the arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.
After being sued for antitrust violations, defendants in this suit sought to enforce an arbitration agreement. Initially, the magistrate judge granted a motion to compel arbitration, concluding that the question of arbitrability of the claims itself belonged to an arbitrator. The district court disagreed, holding that the arbitrability question was one for the courts.
Did the parties in this dispute clearly and unmistakably delegate the threshold arbitrability determination to an arbitrator?
The court held that the parties had not clearly and unmistakably delegated the question of arbitrability to an arbitrator because the most natural reading of the arbitration clause stated that any dispute, except actions seeking injunctive relief, should be resolved in arbitration, and, given that carve-out, the court could not say that the agreement evinced a clear and unmistakable intent to delegate arbitrability. The district court correctly determined that the case was not subject to the arbitration clause because the arbitration clause created a carve-out for actions seeking injunctive relief, and the current action was indeed an action seeking injunctive relief.