Emerging Trends to Watch: A Look Ahead to 2025
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By Virginia Suvieu
What a year 2024 has been so far. Amid a turbulent economy and volatile geopolitics, several court decisions have significantly influenced the arbitration landscape.
In this blog, we’ll explore
- Recent court decisions, including those from the U.S. Supreme Court;
- Their impact on the broader regulatory and legal environment; and
- Solutions, including innovative technologies like the AAA®’s ClauseBuilder® AI (Beta).
Key Supreme Court Decisions of 2024
The U.S. Supreme Court issued several rulings this year that shape how parties navigate arbitration and regulatory frameworks:
1. Loper Bright Enterprises v. Raimondoi
The Court overruled the Chevron deference doctrine, which previously allowed courts to defer to government agencies’ interpretations of the laws they administer. The decision clarified that courts “must exercise their independent judgment in deciding whether an agency has acted within its statutory authority.”
2. Securities and Exchange Commission v. Jarkesyii
The Court held that the Seventh Amendment entitles defendants to a jury trial in federal court for SEC fraud actions seeking civil penalties. This decision could have broader implications for other government agencies that rely on in-house adjudication by administrative law judges (ALJs).
3. Corner Post, Inc. v. Board of Governors of The Federal Reserve Systemiii
This ruling extended the timeframe for challenging regulations under the Administrative Procedure Act (APA), determining that the six-year statute of limitations begins to run only when the cause of action accrues. The decision could expose long-established regulations to renewed legal challenges.
Implications for the Broader Legal Environment
These decisions collectively signal a shift that may significantly impact the regulatory and arbitration landscape:
1. Slower Regulatory Rulemaking
The rulings demand a more comprehensive rulemaking process, including detailed public input. This additional scrutiny could slow down regulatory processes, requiring agencies to allocate more resources to defend their actions.
2. Increased Litigation
As regulatory decisions face heightened scrutiny, litigation against government agencies is likely to increase. Federal court proceedings, often lengthy and costly, could become the norm for challenging regulatory actions.
3. More Challenges to Arbitration Clauses
Recent Supreme Court rulings highlight increased scrutiny of vulnerabilities in arbitration agreements:
- In Coinbase Inc. v. Suskiiv , the Court addressed who decides if a dispute is subject to arbitration when parties have multiple contracts, some with arbitration clauses and some without. Coinbase argued that the arbitration clause in the user agreement should be severed and its validity decided by an arbitrator. The Court disagreed, ruling that contract principles require a court, not an arbitrator, to determine if a prior agreement was superseded by a subsequent one.
- In Smith v. Spizzirriv , delivery drivers sued their employer for alleged violations of employment laws. The defendants moved to compel arbitration and sought to have the case dismissed. While the plaintiffs acknowledged their claims were subject to arbitration, they argued that the Federal Arbitration Act (FAA) required the district court to stay the case rather than dismiss it outright. In a unanimous decision, the Supreme Court agreed, holding that the FAA's statutory language clearly mandates a stay of proceedings while arbitration is ongoing, ensuring the possibility of judicial oversight if needed.
Takeaway: To ensure enforceability, arbitration clauses must be carefully drafted to avoid ambiguities and inconsistencies.
Solutions: Leveraging Technology for Clarity
To navigate these complexities, innovative tools like the AAA’s ClauseBuilder AI can play a pivotal role.
ClauseBuilder AI
This award-winning technology uses generative AI to help parties draft clear, tailored arbitration and mediation clauses. Key features include:
- Natural language processing to understand the parties’ intent;
- Tailored clause suggestions, even for users without extensive legal expertise and;
- A user-friendly interface ideal for businesspeople unfamiliar with legal jargon.
While no technology is infallible, tools like ClauseBuilder AI can significantly reduce the risks of misunderstandings that could escalate into disputes, empowering parties to craft agreements that stand up to legal scrutiny.
Virginia Suveiu is a seasoned California attorney specializing in commercial transactions, including international dealings, and regulatory compliance across heavily regulated industries such as aerospace and defense. With extensive experience in alternative dispute resolution, she serves as a FINRA Chair and Public Arbitrator and has arbitrated and mediated a variety of complex cases. Beyond her legal practice, Virginia is an accomplished editor, notably of the Routledge Handbook of Risk Management and the Law, reflecting her thought leadership in navigating legal and regulatory risk.
iAvailable at: No. 22-451 Slip Opinion: https://www.supremecourt.gov/opinions/23pdf/22-451_7m58.pdf.
iiAvailable at: No. 22-859 Slip Opinion: https://www.supremecourt.gov/opinions/23pdf/22-859_1924.pdf.
iiiAvailable at: No. 22-1008 Slip Opinion: https://www.supremecourt.gov/opinions/23pdf/22-1008_1b82.pdf.
ivAvailable at: No. 23-3 Slip Opinion: https://www.supremecourt.gov/opinions/23pdf/23-3_879d.pdf.
vAvailable at: No. 22-1218 Slip Opinion: https://www.supremecourt.gov/opinions/23pdf/22-1218_5357.pdf.