Important Supreme Court Ruling on Arbitration

Here is a recent US Supreme Court ruling addressing the proper forum to determine the validity of a questioned contract:
BUCKEYE CHECK CASHING, INC. v. CARDEGNA ET AL.
CERTIORARI TO THE SUPREME COURT OF FLORIDA

No. 04–1264. Argued November 29, 2005—Decided February 21, 2006.

For each deferred-payment transaction respondents entered into with
Buckeye Check Cashing, they signed an Agreement containing provisions
that required binding arbitration to resolve disputes arising out of
the Agreement. Respondents sued in Florida state court, alleging that
Buckeye charged usurious interest rates and that the Agreement violated
various Florida laws, rendering it criminal on its face. The trial
court denied Buckeye's motion to compel arbitration, holding that a
court rather than an arbitrator should resolve a claim that a contract
is illegal and void ab initio. A state appellate court reversed, but
was in turn reversed by the Florida Supreme Court, which reasoned that
enforcing an arbitration agreement in a contract challenged as unlawful
would violate state public policy and contract law.

Held: Regardless of whether it is brought in federal or state court, a
challenge to the validity of a contract as a whole, and not
specifically to the arbitration clause within it, must go to the
arbitrator, not the court.

SCALIA, J., delivered the opinion of the Court, in which ROBERTS, C.
J., and STEVENS, KENNEDY, SOUTER, GINSBURG, and BREYER, JJ., joined.
THOMAS, J., filed a dissenting opinion. ALITO, J., took no part in the
consideration or decision of the case.