As recently as 1995, the Supreme Court observed, in First Options of Chicago v. Kaplan, that arbitration was a creature of contract: “[A] party who has not agreed to arbitrate will normally have a right to a court’s decision about the merits of its dispute.”
Yet what constitutes an agreement to arbitrate seems to be very much in play since First Options was decided. In that case, owners of an investment company were held to have agreed to arbitrate disputes involving that company, but were held not to have agreed to arbitrate disputes in their personal capacities. The analysis parsed the distinct legal capacities of informed and sophisticated parties, and determined that the same people consented to arbitrate in one capacity, but did not consent to arbitrate in another — and that they had done so intentionally, strategically and with a particular purpose in mind that the courts were bound to respect.
