Under the principles that have developed from the Federal Arbitration Act, courts generally decide arbitrability matters, unless there is “clear and unmistakable” evidence the parties delegated arbitrability issues to the arbitrator. What counts as a “clear and unmistakable” delegation? A split is developing on this narrow issue, which the Supreme Court has described as “arcane.”
Many courts have held that incorporation of arbitral rules, which in turn provide for the arbitrator to rule on arbitrability, counts as clear and unmistakable evidence. Some cases treat this holding as a majority or prevailing rule. For example, earlier this year, a district court within the Tenth Circuit stated that the Tenth Circuit and “[e]very circuit to address this question has similarly held that the incorporation of arbitration rules that delegate arbitrability questions to an arbitrator constitutes ‘clear and unmistakable’ evidence sufficient to defeat the presumption set forth in First Options.” Old Chicago II Franchising, LLC v. WD Ventures, LLC, No. 23-CV-02596-NYW-STV, 2025 WL 1937169, at *6 (D. Colo. Feb. 10, 2025).
Earlier this week, an appellate court in California took the opposite approach and held “in the context of a mandatory arbitration agreement between an employer and an hourly worker, that the incorporation of the rules of an arbitration provider – without expressly specifying in the parties’ agreement that under those rules the arbitrator will decide the scope and validity of the arbitration agreement – is not clear and unmistakable evidence of the parties’ intent to have those issues decided by the arbitrator.” See Villalobos v. Maersk, Inc., No. B333556 (Cal. Ct. App. Oct. 6, 2025) (click here for a copy of the decision).
There is a developing split on this focused issue of whether mere incorporation of arbitral rules can satisfy the clear and unmistakable standard. For example, in direct contrast to the Villalobos case, other courts in the employment context have recently found that mere incorporation can satisfy this standard. Solecitto v. Axon Enterprise, Inc. No. CV 23-23125, 2025 WL 2803382 (D.N.J. Oct. 2, 2025).
The recent holding from the Villalobos court, whereby mere incorporation is generally insufficient to satisfy the clear and unmistakable standard, represents a better and correct approach in my opinion. For example, arbitral rules can change, and thus a document’s mere incorporation of outside rules should not count as clear and unmistakable evidence. Also, a conflict of interest and concerns about impartiality exist with an arbitrator ruling on their own arbitrability, and the Villalabos rule can help alleviate these concerns by ensuring that a delegation to an arbitrator requires more convincing, clearer evidence.