Parties to an arbitration agreement sometimes choose to include a delegation clause, which is a provision that delegates to the arbitrator—rather than a court—gateway questions of arbitrability, such as whether the agreement covers a particular controversy or whether the arbitration provision is enforceable at all. See Caremark LLC v. Chickasaw Nation.

In Holley-Gallegly v. TA Operating, LLC, the Ninth Circuit recently reinforced the Supreme Court’s decade-old distinction between the analysis needed to determine whether a dispute is subject to arbitration on the one hand, and whether an arbitrator has been legally delegated the authority to make that threshold determination on the other. The decision provides important lessons to practitioners litigating disputes regarding the enforceability of delegation clauses.

Arbitration provisions are common features of commercial agreements.  Arbitration is often touted as a cost-effective alternative to litigation that provides contract parties the freedom to decide everything from what law the arbitrator should apply, to what issues the arbitrator should resolve.  The parties can even delegate to the arbitrator the issue of what should and should not be arbitrated (also known as arbitrability issues) by incorporating a delegation clause in their arbitration agreement.