A clause delegating to an arbitrator the authority to decide questions of an arbitration agreement’s enforceability was not unconscionable under California law, the California Court of Appeal has ruled. Malone v. Superior Court, No. B253891 (Cal. Ct. App. June 17, 2014). The Court affirmed an order enforcing the delegation clause and compelling arbitration. Significantly, the Court rejected, as preempted by the Federal Arbitration Act (“FAA”), California case law reasoning that such delegation clauses are unconscionable because arbitrators have a financial self-interest in finding an agreement arbitrable — so that they can be compensated for arbitrating the dispute on the merits and be considered for further arbitration assignments.

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