The New Jersey Supreme Court has just issued an opinion on arbitration that, while perhaps sensible in result, seems to turn the usual paradigms upside down. Instead of deciding whether an arbitration clause was unconscionable and should be stricken (or at least whether the unconscionable parts should be severed), the Court decided (1) it didn’t know what the clause meant, (2) that question was for the arbitrator, but (3) that if the arbitrator decided certain ways, that would be unconscionable. The effect, of course, was to interpret the agreement it wasn’t interpreting, at least by ruling out certain interpretations.
Given the pervasiveness of arbitration in both consumer and employment contexts, this is an important decision. How it fits into more conventional notions of the relationship between courts and arbitrators is anyone’s guess, but I’ll hazard a few.