The U.S. Supreme Court heard oral arguments Wednesday on a key case on arbitration law, American Express v. Italian Colors. The details are many and complex -- tying clauses! --  but at heart they go to the legality and  benefits of contract provisions requiring arbitration.

The question the court was presented with: "Whether the Federal Arbitration Act permits courts, invoking the "federal substantive law of arbitrability," to invalidate arbitration agreements on the ground that they do not permit class arbitration of a federal-law claim.

Bloomberg's report is solid. From "Amex Policy Reopens High Court Debate on Arbitration": 

The enforceability of millions of routine arbitration agreements could be at stake in the court’s decision. The merchants and the U.S. say an American Express (AXP) victory would block consumers from banding together and sharing costs to pursue claims of wrongdoing in an arbitration proceeding. Business trade groups led by the U.S. Chamber of Commerce argued in a court filing that invalidating arbitration clauses would “open a vast loophole” for claimants seeking to dodge agreements they made.

Business Roundtable joined the Chamber in an amicus brief (here) arguing for the merits of American Express' arbitration policy and against the Second Circuit's decision that upheld Italian's objections.

Daniel Fisher at Forbes asks, "Will An Italian Restaurant End The Class Action As We Know It?"

The justices expressed strong skepticism about the central premise of the case, which is that antitrust lawsuits are so expensive to bring that Amex effectively precluded them by requiring merchants to sign an agreement requiring them to settle all disputes in arbitration. If the court rules against Italian Colors, it could open the door to more widespread use of arbitration clauses that ban class actions, possibly even including changes in corporate bylaws to preclude securities class actions. The Supreme Court held that class waivers are enforceable in the 2011 decision AT&T Mobility v. Concepcion.

At the Point of Law blog  Cardozo law professor Myriam Gilles alongside and the Manhattan Institute's Ted Frank delve deep into the legal arguments.

• Reuters, "Supreme Court split on merchants' antitrust case vs American Express"
• New York Times, "Justices Appear Skeptical Over a Challenge to Required Arbitration"

 The case docket is here, and one can read the transcript here.