Until the recent decision in Buckeye Check Cashing, Inc. v. Cardegna, 126 S.Ct. 1204 (Feb. 21, 2006), there was some uncertainty as to how claims of illegality would fare against attempts to enforce arbitration agreements.
U.S. Supreme Court Settles Whether Illegality Claims Go to Arbitrator
Until the recent decision in <i>Buckeye Check Cashing, Inc. v. Cardegna</i>, 126 S.Ct. 1204 (Feb. 21, 2006), there was some uncertainty as to how claims of illegality would fare against attempts to enforce arbitration agreements. The decision did not turn on whether the contract was void or voidable, as did earlier lower court decisions, but simply on whether the illegality claim was directed to the underlying contract or the arbitration clause itself. Relying on <i>Prima Paint Corp. v. Flood & Conklin Mfg. Co.</i>, 388 U.S. 395 (1967), the Court treated the illegality claim in the same manner as a claim of fraud in the inducement and held that '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.' 126 S.Ct. at 1206.
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