514 U.S. 938 (1995)
Following the October 1987 stock market crash, MKI and the Kaplans incurred debts to First Options of Chicago, Inc., a firm that clears stock trades on the Philadelphia Stock Exchange.1 In 1989, after entering into a workout agreement embodied in four separate documents, MKI lost an additional $1.5 million.2
First Options took control of and liquidated MKI assets, demanded immediate payment of the entire MKI debt, and insisted that the Kaplans personally pay any deficiency.3 When its demands went unsatisfied, First Options sought arbitration by a panel of the Philadelphia Stock Exchange.4
MKI, having signed the only workout document that contained an arbitration clause, accepted arbitration.5 The Kaplans, who had not personally signed that document, denied that their disagreement with First Options was arbitrable and filed written objections to that effect with the arbitration panel.6 The arbitrators decided that they had the power to rule on the merits of the parties' dispute and did so in favor of First Options.7
The Kaplans asked the Federal District Court to vacate the arbitration award, and First Options requested its confirmation.8 The District Court confirmed the award.9 On appeal, the Court of Appeals for the Third Circuit agreed with the Kaplans that their dispute was not arbitrable and reversed the District Court's confirmation of the award against them.10 The Supreme Court granted certiorari to consider questions regarding the standards that the Court of Appeals used to review the determination that the Kaplans' dispute with First Options was arbitrable.11
Whether a district court should independently review an arbitrator's decision that the parties agreed to arbitrate a dispute?12
The question of who has the primary power to decide arbitrability turns upon what the parties agreed about that matter. If the parties agreed to submit the arbitrability question itself to arbitration, then the court's standard for reviewing the arbitrator's decision about that matter should not differ from the standard courts apply when they review any other matter that parties have agreed to arbitrate, giving considerable leeway to the arbitrator. If the parties did not agree to submit the arbitrability question itself to arbitration, then the court should decide that question independently. Courts should not assume that the parties agreed to arbitrate arbitrability unless there is clear and unmistakable evidence that they did so.1314
Yes. The Kaplans did not clearly agree to submit the question of arbitrability to arbitration because they had not personally signed the document containing the arbitration clause and they filed written objections to arbitrability with the panel. Merely arguing the arbitrability issue to the arbitrators does not indicate a clear willingness to be bound by the arbitrator's decision on that point. Therefore, the district court should independently review the arbitrator's decision that the parties agreed to arbitrate the dispute.15
A district court should independently review an arbitrator's decision that the parties agreed to arbitrate a dispute when the parties did not clearly and unmistakably agree to submit the arbitrability question itself to arbitration.16
Whether a court of appeals should apply a de novo standard when reviewing a district court's decision confirming or refusing to vacate an arbitration award?17
Courts of appeals should apply ordinary standards when reviewing district court decisions upholding arbitration awards, accepting findings of fact that are not clearly erroneous but deciding questions of law de novo. There is no special lenient abuse of discretion standard for reviewing district court decisions that confirm arbitration awards.18
Yes. The Court of Appeals for the Third Circuit correctly applied ordinary standards of review rather than a special abuse of discretion standard when it reviewed the District Court's confirmation of the arbitration award. The Third Circuit reviewed the arbitrability determination independently as a legal question while accepting findings of fact that were not clearly erroneous. This approach follows from the institutional advantages of trial and appellate courts and from the Arbitration Act's silence on standards of review.19
The Act's provision governing the timing of interlocutory appeals does not support a different standard of review for district court decisions confirming arbitration awards.20
A court of appeals should apply a de novo standard when reviewing questions of law in a district court's decision confirming or refusing to vacate an arbitration award.21