Federal Arbitration Act Preempts State Laws Discriminating Against Arbitration Clauses

The 7-1 majority opinion not only strengthened the substance of case law protecting arbitration agreements, but also signaled that the U.S. Supreme Court would not bend on the issue in the future.

In Kindred Nursing Centers Ltd. Partn. v. Clark, 16-32, 2017 WL 2039160 (U.S. May 15, 2017), the U.S. Supreme Court struck down a ruling by the Supreme Court of Kentucky that invalidated arbitration agreements signed by individuals with powers of attorney because the principals did not expressly provide their agents with authority to enter into arbitration agreements.  The ruling reaffirmed the preemptive effect of the Federal Arbitration Act ("FAA"), codified at 9 U.S.C. § 1 et seq., over state laws that discriminate against arbitration clauses.  The Supreme Court clarified that this rule applies regardless of whether the state laws are directed at contract formation or enforcement.