Last week, the Supreme Court granted cert in an arbitration matter involving a Dogecoin dispute, Coinbase, Inc. v. Suski.
This case involves a “delegation” arbitration clause, whereby parties agree to arbitrate threshold arbitrability matters. More specifically, when parties enter into an arbitration agreement with a delegation clause, and thereafter, the parties enter into a second arbitration agreement with no delegation clause, who decides threshold arbitrability issues, a court or arbitrator?
Personally, I believe Coinbase is trying to stretch arbitration law too far with its arguments. It seems that Coinbase wants to create an evergreen delegation clause that, once entered into, forever binds the parties for all subsequent transactions or agreements. In other words, according to Coinbase, once a delegation clause is entered into in connection with one transaction between the parties, the delegation clause becomes like a zombie clause that never dies. If the Court accepts Coinbase’s argument, then how would parties revoke a zombie delegation clause in the future? Would parties, in future agreements, have to clearly and unmistakably repudiate a prior delegation clause? Such a holding would complicate this arcane area of arbitration law. A simpler solution would be to hold that the second arbitration clause, with no clear delegation, no longer involves a delegation. The burden should be placed on a drafting party to include delegation clauses in any subsequent arbitration agreements if so desired. Here, it seems that Coinbase’s attorneys were not careful in the drafting of the second agreement and simply forgot to include a delegation clause. If the Court ultimately rules in favor of Coinbase (which I hope the Court does not do), the Court would be rescuing Coinbase from its own poor drafting.