U.S. Supreme Court Rules Judges, Not Arbitrators, Decide Arbitrability in Coinbase Dispute

On Friday, May 24, 2024, the United States Supreme Court granted certiorari in the case of Coinbase, Inc. v. Suski et al to decide a dispute regarding which agreement takes precedence when parties are bound by multiple contracts with differing arbitration clauses.

The case involves Coinbase, a major cryptocurrency exchange platform, and several of its users who are involved in a class action lawsuit against the company. When signing up for Coinbase accounts, the users agreed to the platform’s User Agreement, which contains an arbitration clause stating that any disputes must be resolved through arbitration. However, the users later entered a sweepstakes promotion run by Coinbase that had its own set of Official Rules. These Rules included a forum selection clause specifying that any controversies regarding the promotion would be subject to the jurisdiction of California state and federal courts.

After the sweepstakes concluded, the users filed a class action complaint against Coinbase in federal court in California, alleging the promotion violated various state consumer protection laws. Coinbase sought to compel arbitration, citing the User Agreement’s arbitration clause. However, the users argued the Official Rules’ forum selection clause superseded the earlier agreement to arbitrate. The district court and Ninth Circuit Court of Appeals both agreed the forum clause controlled, given the apparent conflict between the two agreements.

The Supreme Court took up the case to resolve the issue of whether a court or arbitrator should determine which agreement takes precedence when parties are bound by multiple, conflicting contractual provisions regarding dispute resolution.

In its decision, the Court affirmed the Ninth Circuit’s ruling and established that the basic principles of contract law require a court to first examine the parties’ agreements and decide which one governs before arbitration can be compelled. The Court emphasized that arbitration is strictly a matter of consent between parties as manifested through their contractual agreements.

By granting certiorari and establishing clear rules on handling disputes over competing arbitration provisions, the Coinbase decision provides helpful guidance for businesses in the growing cryptocurrency and blockchain sector that regularly utilize digital contracts and arbitration in their online platforms and services.

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