Law Center Search Results

The Supreme Court 2/21/06 reaffirmed that a challenge to the validity of a contract as a whole, and not specifically to an arbitration provision within the contract, must be decided by the arbitrator. Respondents sued Petitioner, a provider of check-cashing services, in state court, alleging that the interest rate charged by Petitioner is usurious under Florida law. Petitioner moved to enforce the arbitration clause in its contracts with Respondents, and the Florida Supreme Court held that state contract law and public policy precluded enforcement of an arbitration agreement in a contract challenged as unlawful. In an opinion by Justice Scalia, the Supreme Court reversed. Stressing its prior holdings in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967), and Southland Corp. v. Keating, 465 U.S. 1 (1984), the Supreme Court explained that: (1) as a matter of federal arbitration law, an arbitration provision is severable from the remainder of the contract; (2) unless the challenge is to the arbitration clause itself, the issue of the contract's validity is considered by the arbitrator in the first instance; and (3) these principles apply in state as well as federal courts. This case is important to any individual or business that may be a party to a contract containing an arbitration clause. Decision below: 894 So. 2d 860 (Fla. 2005)

Decision Below: 894 So. 2d 860 (Fla. 2005)