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LEGAL BEAT THE DELEGATION CLAUSE arbitration provision. Jackson Offshore moved to compel ciple, challenges to the broader contract go to the arbitra- arbitration, but the district court denied the motion with- tor – not the court – per the delegation clause.

out prejudice, reasoning discovery should be conducted on

Key Takeaways arbitrability. It then fled a timely interlocutory appeal to the Fifth Circuit, even though the district court’s denial • Delegation clauses can be enforceable shields. If was without prejudice. your agreement contains one and it is not specifcally challenged, courts will compel arbitration – even if the underlying contract is disputed for fraud or duress.

Key Contract Language

The arbitration clause stated: • General attacks are not enough. Saying “I chal- “I am not giving up my right to bring any claims against lenge the arbitration clause” without explaining how the Company for my injuries or illness. However, in ex- fraud or duress applies specifcally to the delegation change for the Company’s Agreement to provide these ad- clause will not survive. Courts require targeted, granu- ditional benefts, I agree that if I choose to fle a claim lar argument.

or lawsuit against the Company… I will submit any such • Draft with delegation in mind. Offshore operators claims to binding arbitration…” and energy companies should ensure their arbitration

The delegation clause included: agreements contain explicit, broad delegation clauses. “Any dispute relating to the validity, interpretation, or The language here – covering “validity, interpretation, application of this Agreement shall be submitted to the or application” – proved decisive.

arbitrator for resolution.” • Seamen’s counsel must aim precisely. Counsel rep- resenting injured maritime workers must specifcally allege how fraud or duress induced agreement to the

What Is a Delegation Clause?

Most people are familiar with arbitration clauses – pro- delegation clause itself – not just the broader agreement visions requiring that disputes be resolved by a private ar- – to get a court hearing.

bitrator rather than a jury. A delegation clause goes a step • Interlocutory appeals are available. The court further. It delegates to the arbitrator the power to decide confrmed that an order denying arbitration – even threshold “gateway” questions – including whether the ar- “without prejudice” and permitting discovery – is im- bitration agreement itself is valid or enforceable in the frst mediately appealable. Operators shouldn’t assume they place. For a delegation clause to be displaced, the party must wait for a fnal ruling.

resisting arbitration must specifcally challenge that clause • Circuit tension remains unresolved. Two con- – not the broader contract. currences reveal disagreement on whether courts must frst analyze “contract existence” before reaching the

What the Appellate Court Decided delegation clause – a doctrinal fault line to watch as

Under U.S. Supreme Court precedent from Rent-A- cases develop.

Center v. Jackson (2010), a party who wants a court – rather than an arbitrator – to resolve a validity challenge For maritime employers, offshore operators, and energy must direct that challenge specifcally at the delegation contractors: a well-drafted delegation clause can be one of the clause itself. Hill’s arguments – fraud in the inducement more valuable protections in an arbitration agreement. This and economic duress – attacked the agreement as a whole. decision confrms that so long as the clause is in place and not

He never explained how those arguments applied differ- specifcally targeted with granular argument, broad attacks on ently, or specifcally, to the delegation clause. The panel an agreement’s validity belong in front of an arbitrator, not found Hill’s framing insuffcient. Even though his opposi- a jury. For plaintiffs’ maritime counsel, the lesson is equally tion brief said he challenged “both the entire Agreement, clear: if you want a court to hear your challenge to an arbitra- as well as the arbitration language or ‘clause’ specifcally,” tion agreement, you must surgically direct your arguments at

Hill offered no analysis connecting fraud or duress to the the delegation clause, not just the contract as a whole. Any- delegation clause in particular. Under the severability prin- thing less, and the courthouse door likely stays shut.

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