Last week, in Coinbase, Inc. v. Suski, 144 S.Ct. 1186, 2024 WL 2333424 (May 23, 2024), the U.S. Supreme Court unanimously held that when there are two conflicting contracts between the parties – one that requires a court to address a question of arbitrability and another that requires an arbitrator to address that question – a court must decide which contract controls.
Parties can form multiple levels of agreements concerning arbitration, leading to different kinds of disputes: first-order (merits of the dispute), second-order (whether they agreed to arbitrate the merits), and third-order (who decides the second-order question). This case involved a fourth-order dispute: “What happens if parties have multiple agreements that conflict as to the third-order question of who decides arbitrability?” In an opinion written by Justice Jackson, the Court turned to “basic legal principles” to answer this question.
The Federal Arbitration Act’s fundamental principle, Justice Jackson noted, is that “arbitration is a matter of contract and consent.” As a result, courts can send disputes to arbitration if – and only if – the parties actually agreed to arbitrate those disputes. When parties are bound by two contracts that conflict with respect to who decides arbitrability, the question of which contract governs turns on “whether the parties agreed to send the given dispute to arbitration.” That threshold question of consent, the Court held, “must be answered by a court.”