In May 2010, the United States Supreme Court held that a tribunal had exceeded its powers under the Federal Arbitration Act (FAA) by construing an arbitral clause to permit class arbitration when the clause did not address that issue (see Legal update, Supreme Court rules class arbitration is unavailable when agreement is silent). The Court ruled that a party may only be compelled to submit to class arbitration if that party contracted to do so. However, the Court did not decide how parties could demonstrate intent to include class arbitration where the clause does not contain such express language. Further, the court did not decide whether the FAA pre-empts state courts from permitting class arbitration under state law in such situations. The decision has already impacted the law regarding class action waivers; however the real significance of the decision depends on the outcome in AT&T v Concepcion (see below).

On 9 November 2010, the Supreme Court heard oral argument on whether a state may refuse to enforce an arbitration agreement that does not allow class arbitration (see Legal update, Supreme Court hears arguments in class arbitration case). The Supreme Court is reviewing the Ninth Circuit's decision in Laster v AT&T Mobility LLC, 584 F.3d 849 (9th Cir. 2009). The case involves an arbitration agreement that expressly prohibits class actions but provides no substitute for class litigation or arbitration. The Ninth Circuit rejected AT&T's argument that California law was pre-empted by the FAA and held that the contract was unconscionable under California law. The Supreme Court's decision is expected in 2011 (see Anticipated Developments in 2011 below).

On 21 June 2010, the US Supreme Court issued a decision limiting judicial review of arbitral agreements (see Legal update, The US Supreme Court limits judicial review of arbitration agreements). The court held 5-4 that where an arbitral agreement contains a "delegation provision" (a clause delegating the power to determine the enforceability of the arbitral agreement to the arbitrator), a court may step in to decide enforceability only if a party makes a specific challenge to the delegation agreement. If a party challenges the arbitration agreement as whole, the arbitrator will decide enforceability. The court's decision is a victory for businesses that favour arbitration to litigation of complaints by consumers and employees, but its impact is uncertain. The decision may be limited to situations where an arbitration agreement is separate from a main contract, such as is frequently found in the employment context, or it may apply more broadly. Regardless, it is likely that standard form contracts will increasingly contain delegation provisions, which may be insulated from judicial review because they are difficult to challenge in themselves.

The Dodd-Frank Act and the Arbitration Fairness Act (currently pending) could affect the scope of mandatory arbitration. While these particular pieces of legislation concern the financial services, employment and consumer sectors, it is possible that they may influence more generally the way in which courts approach mandatory arbitration.