1. The Holding in Schein, Inc. v. Archer & White Sales, Inc. Maintains Principles of Arbitration

In a recent unanimous decision dated 8 January 2019, Justice Kavanaugh delivered his first opinion of the United States Supreme Court (the “Court”) in Henry Schein, Inc. v. Archer and White Sales, Inc.  As set-out below, the Court’s decision in Schein is in line with principles of international arbitration – namely that courts must respect the terms of the arbitration agreement as written and that, if the parties agreed, an arbitral tribunal has the power to decide threshold questions of arbitrability.

In Schein, Archer and White brought suit in the United States District Court for the Eastern District of Texas alleging violations of federal and state antitrust law, seeking monetary damages and injunctive relief.  The contract’s arbitration agreement in part stated:

Any dispute arising under or related to this Agreement (except for actions seeking injunctive relief … shall be resolved by binding arbitration in accordance with the arbitration rules of the American Arbitration Association [(AAA)] …

The issue before the Court was whether there was a “wholly groundless” exception to the widely-established principle that an arbitral tribunal and not a court has the power to decide “threshold” questions of arbitrability. Previously, the Fifth, Sixth, and other Federal Circuits had upheld an exception when the notion that a claim is subject to the arbitration agreement is “wholly groundless.”  The Court granted certiorari to address the disagreement among circuit courts over whether a “wholly groundless” exception comports with the FAA and Court precedent.

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