The Supreme Court in Morgan v. Sundance, Inc. held that a demand for arbitration must be timely raised. Courts should raise waiver if a party fails to raise arbitration at the earliest opportunity.
Morgan argued that Sundance waived its right to arbitrate. The Eighth Circuit found no waiver because Morgan was not prejudiced. However, prejudice is not necessary. The right to arbitration can be waived like any other contractual right – even if the other party was not prejudiced by the delay.
Justice Kagan explained that, while the Federal Arbitration Act reflects a policy favoring arbitration, it “does not authorize federal courts to invent special, arbitration-preferring procedures.” Instead, a federal court interpreting an arbitration clause must apply ordinary procedural rules.