In this case, the Kentucky Supreme Court’s clear-statement rule was held to violate the Federal Arbitration Act by singling out arbitration agreements for disfavored treatment.
The Federal Arbitration Act (the Act) makes arbitration agreements “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract,” 9 U.S.C. ¶ 2, establishes an equal-treatment principle: A court may invalidate an arbitration agreement based on “generally applicable contract defenses,” but not on legal rules that “apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue,” AT&T Mobility, LLC v. Concepcion, 563 U.S. 333, 339.
The Act thus preempts any state rule that discriminates on its face against arbitration or that covertly accomplishes the same objective by disfavoring contracts that have the defining features of arbitration agreements.