Rsl Funding, LLC and Rsl Special-Iv Limited Partnership v. Rickey Newsome
569 S.W.3d 116 | Texas Supreme Court | 2018
What This Case Means for Subcontractors
A company tried to force arbitration of a dispute over structured settlement transfers, but lower courts refused. The Texas Supreme Court ruled that when parties agree to let an arbitrator decide whether disputes are arbitrable, courts must honor that agreement and send the case to arbitration. This matters to subcontractors because many construction contracts include similar arbitration clauses that delegate arbitrability decisions to arbitrators.
Key Takeaways
- •If your contract says the arbitrator decides what disputes are arbitrable, courts will enforce that—don't expect judges to block arbitration by claiming a dispute isn't arbitrable.
- •Review your arbitration clauses carefully. Delegating arbitrability to the arbitrator is a powerful tool that limits your ability to fight arbitration in court.
- •When drafting or signing contracts with arbitration provisions, understand whether you're giving the arbitrator power to decide if disputes fall under the arbitration clause.
Courts must compel arbitration when parties delegate arbitrability to the arbitrator.
Frequently Asked Question
If my contract has an arbitration clause that lets the arbitrator decide what's arbitrable, can I still go to court instead?
No. Once you agree to let the arbitrator decide arbitrability, courts will compel arbitration and won't second-guess that decision. The arbitrator gets to decide whether your dispute falls under the arbitration clause, not the judge. This applies even if the dispute seems like something only a court should handle.
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