If an arbitration agreement allows the arbitrator to determine if the agreement is enforceable, the arbitrator can, unless that agreement is challenged...huh?

Today, the United States Supreme Court added to its recent spate of arbitration-related decisions.  In Rent-A-Center, West, Inc. v. Jackson (June 21, 2010), the Supreme Court considered one aspect of when a court determines arbitration agreement enforceability and when that determination must be left to the arbitrator.  In short, the Court held that, under the FAA, where an agreement to arbitrate includes anagreement that the arbitrator will determine the enforceability of that agreement, if a party specifically challenges the enforceability of the specific agreement to give the arbitrator the power to determine enforceability, the trial court considers that specific challenge.  But if a party challenges the enforceability of the agreement as a whole, the challenge is reserved for the arbitrator because of the delegation of that power to the arbitrator.

The dissent is rightly perplexed by this strange outcome:

In other words, when a party raises a good-faith validity challenge to the arbitration agreement itself, that issue must be resolved before a court can say that he clearly and unmistakably intended to arbitrate that very validity question. This case well illustrates the point: If respondent’s unconscionability claim is correct—i.e., if the terms of the agreement are so one-sided and the process of its making so unfair—it would contravene the existence of clear and unmistakable assent to arbitrate the very question petitioner now seeks to arbitrate. Accordingly, it is necessary for the court to resolve the merits of respondent’s unconscionability claim in order to decide whether the parties have a valid arbitration agreement under §2.  Otherwise, that section’s preservation of revocation issues for the Court would be meaningless.

Dissent, at 7.  In light of the current Court's view on arbitration agreements, it will likely take legislation to protect consumers and employees from adhesive arbitration agreements.