Prima Paint Corp. V. Flood & Conklin Mfg. Co. - Legacy

Legacy

Prima Paint established in federal jurisprudence what became known as the "separability" or "severability" principle in contracts with arbitration clauses, under which a legal fiction is created that the clause itself constitutes a contract separate from the underlying, or "container", contract. This is similar to the principle of compétence compétence in international arbitration, under which the arbitrator or arbitrators are presumed competent to decide the limits of their own jurisdiction.

Starting in the mid-1980s, the Court has greatly expanded the reach of Prima Paint in later cases. Since some of these have applied to the expanded use of arbitration clauses in contracts of adhesion between companies and consumers, some consumer advocates and legal scholars have criticized the decision as the inadvertent opening wedge of an assault on the right to litigate, and a weakening of state contract law and the Erie Railroad principle of deference to state common law. Defenders of the decision have responded that it simply began bringing the U.S. more in line with international arbitration practice, helping American companies compete in a global economy. One, Alan Rau, has also argued that it is justified not just by the Arbitration Act but by general principles of contract law.