Freedom of contract is a longstanding principle deeply rooted in American jurisprudence, protected by the Contract Clause and by the Due Process Clauses of the Fifth and Fourteenth Amendments.' Because of the legal system's high regard for freedom of contract, parties are free to negotiate virtually all issues, thus creating rights and limiting duties and obligations to one another.
In exercising this freedom to contract, parties often negotiate an arbitration clause. These clauses, also referred to as "predispute arbitration agreements," are contractual provisions agreed to in advance of any dispute that require a party to submit any and all future disputes to arbitration. The American Arbitration Association's standard arbitration clause, for example, places the following obligations on the signatories:
"Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association in accordance with its [applicable] rules and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof."
Despite the promise to arbitrate, oftentimes one party will circumvent an arbitration agreement and turn to the traditional dispute resolution mechanism: litigation. In these situations, the defendant typically brings the arbitration clause to the court's attention, asking the court to compel the plaintiff to arbitrate. Upon being asked to enforce an arbitration agreement, the court decides whether it is valid to compel the parties to arbitrate. First, the court must determine whether there is an agreement to arbitrate. The court must undertake this task first because "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." The gateway question of arbitrability (whether there is a valid arbitration agreement) is "undeniably an issue for judicial determination.'
Alexandra A. Hui,
Equitable Estoppel and the Compulsion of Arbitration,
60 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vlr/vol60/iss2/14