Jump Trading, LLC, et al. v. Taewoo Kim, et al.

Traditional contract law principles allow someone who has not signed a contract to enforce it against a signatory party in certain situations. These nonsignatory-enforcement principles—including the equitable-estoppel doctrine—apply to arbitration agreements. But federal and state courts are in open and acknowledged conflict over how to adjudicate nonsignatories’ requests to compel arbitration under the Federal Arbitration Act (FAA). There is a 7-6 split on whether a court or arbitrator decides the threshold nonsignatory-enforcement issue when the arbitration agreement delegates “arbitrability” questions to arbitrators, and a 4-2 split on whether federal or state law governs equitable estoppel in agreements subject to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention” or “Convention”). In its decision below, the Seventh Circuit rejected arbitration and deepened the circuit splits on both issues. Its decision is at odds with the FAA, the New York Convention, and contract principles allowing nonsignatory enforcement. The questions presented are:

1. Whether an arbitrator or a court must decide whether a nonsignatory may compel arbitration under an agreement that delegates “arbitrability” questions to an arbitrator.

2. Whether a uniform federal common law of equitable estoppel allows a nonsignatory defendant to enforce an arbitration agreement subject to the New York Convention when the signatory plaintiff alleges that the nonsignatory defendant engaged in concerted misconduct with a signatory.