The recent United States Supreme Court case of Preston v. Ferrer 552 U.S. ___, 128 S. Ct. 978 (decided February 20th, 2008) reaffirmed that challenges to the validity of a contract calling for arbitration ordinarily “should … be considered by an arbitrator, not a court.”
In addition, the high court ruled that “When parties agree to arbitrate all questions arising under a contract, the FAA supersedes state laws lodging primary jurisdiction in another forum, whether judicial or administrative.”
A series of California cases held that an arbitration provision can’t limit an FEHA claim by an employee failing to exhaust the internal remedy process established by the employer; and an arbitrator’s disclosure obligations are not triggered until he or she is notified of selection to serve as arbitrator (it would be nice to know this up front in the arbitration process). Finally, if arbitration terms are incorporated by reference to another document, this document must clearly state a term for the court to compel arbitration.
Bottom line: If you believe that arbitration will end up saving you dollars, make sure to include the court costs associated with getting to decide whether you arbitrate in the first place! Click here for more information.