11th Circuit enforces delegation provisions in arbitration agreements for tribal loan

Courts Eleventh Circuit Arbitration Federal Arbitration Act Tribal Lending Consumer Finance

On October 3, the U.S. Court of Appeals for the Eleventh Circuit reversed and remanded a decision regarding the applicability of an arbitration agreement within a loan agreement. The loan agreement included arbitration and delegation provisions that assigned threshold questions of arbitrability to an arbitrator. The district court had found these provisions unconscionable and unenforceable, reasoning that the agreements were governed by Tribal law, which it believed did not include the substantive contract law necessary for arbitrability determinations.

The 11th Circuit unanimously reversed the district court’s decision, concluding that the delegation provision was enforceable and required the arbitrator to resolve “all disputes concerning the ‘validity, enforceability or scope of’ the arbitration agreements.” The court also held that the arbitration agreements incorporated the Federal Arbitration Act (FAA) rather than precluded it. Under the FAA, parties may contractually “agree to delegate ‘gateway’ questions of ‘arbitrability’ to an arbitrator.”

Additionally, the court held that the enforceability of an arbitration agreement due to the existence of a choice-of-law provision is an issue for the arbitrator, rather than the court, to properly resolve. As such, the 11th Circuit remanded the case for further proceedings, allowing the arbitrator to decide the enforceability of the arbitration agreements.