A party waives the right to arbitrate when it behaves as though the arbitration clause doesn’t exist — typically by litigating the case in court on the merits, participating in discovery, or sitting on the right for too long before raising it. Since the Supreme Court’s 2022 decision in Morgan v. Sundance, Inc., a court applying the Federal Arbitration Act will refuse to send a case to arbitration based on that conduct alone, without requiring the opposing side to prove it was harmed by the delay.1Cornell Law School. Morgan v. Sundance, Inc.
Waiver here is the voluntary abandonment of a known contractual right. It doesn’t require a formal statement. Courts routinely infer it from what a party did in the lawsuit. If you wanted arbitration, the thinking goes, you would have said so before spending everyone’s time and money in court.
What Counts as Acting Inconsistently With Arbitration
No single act is automatically fatal. Courts look at the full picture of what a party did before trying to invoke the clause. Certain actions weigh heavily.
Pleadings and Substantive Motions
Filing an answer that engages with the merits of the claims — rather than moving to compel arbitration first — is one of the strongest signals of waiver. Filing a counterclaim pushes further in that direction, because it affirmatively uses the court’s authority to seek relief.2Office of the Law Revision Counsel. 9 USC 3 – Stay of Proceedings Where Issue Therein Referable to Arbitration A motion for summary judgment, which asks the judge to decide the case as a matter of law, is about as inconsistent with wanting an arbitrator’s decision as it gets.
Discovery
Discovery is where most parties quietly seal their own fate. Requesting depositions, serving interrogatories, or demanding document production all commit the opposing side to spending real time and money on the court case. Courts have consistently treated extensive discovery as conduct that contradicts any claimed desire for arbitration. Even limited participation gets scrutinized, especially now that the opposing side no longer has to prove prejudice.
Removal to Federal Court
Removing a case from state court to federal court does not, by itself, waive the right to arbitrate. The general rule is that removal alone isn’t enough. But courts watch what happens next. A defendant who removes and promptly moves to compel arbitration is in a much safer position than one who removes, files an answer, and starts litigating. The safest practice is to reference arbitration rights in the removal papers and move to compel shortly after.
Delay
Time matters even without dramatic courtroom activity. A party that sits on its arbitration right for months while the case moves through scheduling conferences and pretrial deadlines builds a record of passive acceptance. There is no fixed deadline, but the longer the wait, the harder it becomes to argue the delay was anything other than a strategic choice to keep the case in court until litigation started going badly.
The Morgan v. Sundance Standard
Before 2022, most federal appellate courts required the party resisting arbitration to prove “prejudice” — concrete harm such as wasted legal fees or lost evidence caused by the other side’s delay. That extra hurdle made waiver difficult to establish, because even blatant litigation conduct could be excused if the plaintiff couldn’t quantify the damage.
The Supreme Court eliminated that requirement in Morgan v. Sundance, Inc. The Court pointed to Section 6 of the Federal Arbitration Act, which says any application under the statute “shall be made and heard in the manner provided by law for the making and hearing of motions.” That language, the Court explained, directs courts to apply ordinary procedural rules, and ordinary waiver rules don’t include a prejudice element. The FAA’s policy favoring arbitration means arbitration agreements should be “as enforceable as other contracts, but not more so.” Creating a special prejudice requirement for arbitration waiver gave arbitration clauses more protection than any other contractual right, which the FAA doesn’t authorize.1Cornell Law School. Morgan v. Sundance, Inc.
The practical effect is significant. Courts now focus on whether the party acted inconsistently with its right to arbitrate, full stop. A defendant that waits eight months while actively litigating can lose the right based on that conduct alone, regardless of whether the plaintiff can show a dollar of harm.
One boundary worth noting: the FAA governs arbitration agreements in contracts involving interstate commerce, and when it applies, Morgan‘s no-prejudice rule binds both federal and state courts.3Office of the Law Revision Counsel. 9 USC 2 – Validity, Irrevocability, and Enforcement of Agreements to Arbitrate For contracts outside the FAA’s reach or governed by state arbitration law, the standard may differ, and the specific agreement needs to be checked.
Who Decides Whether Waiver Occurred
When a defendant has been litigating in court and then tries to move the case to arbitration, the judge decides whether that conduct amounts to waiver. This holds even when the contract contains a “delegation clause” assigning threshold arbitration questions to the arbitrator.
The reasoning is straightforward. A delegation clause is itself a contractual right that can be waived through the same litigation conduct. If a defendant delays for months before raising arbitration, the plaintiff can argue that the delay waived both the arbitration clause and the delegation clause. The court first decides whether the delegation clause was waived; if it was, the court then decides the broader waiver question too. That prevents a party from using a delegation clause as a back door to force an arbitrator to clean up what amounts to a forfeited right.
How to Preserve the Right to Arbitrate
Every step a party takes after a lawsuit is filed either protects or erodes the right to arbitrate. The window is narrow, and after Morgan there’s no prejudice safety net to fall back on.
- Move to compel arbitration immediately. File the motion as your first substantive response. There’s no fixed deadline that guarantees safety, and the longer you wait, the worse it looks.
- Raise arbitration as an affirmative defense. If you have to file an answer before the motion to compel is ready, include an affirmative defense asserting the right. Failing to mention arbitration in the answer is one of the factors courts weigh most heavily.
- Reference arbitration in every filing. Motions, conference reports, and scheduling submissions should note that you intend to compel arbitration and reserve the right. That creates a paper trail of consistent intent.
- Avoid discovery. Don’t serve interrogatories, request documents, or take depositions. If the court orders discovery before ruling on the motion to compel, ask for a stay or at a minimum object on the record.
- Don’t file unconditional counterclaims. If a counterclaim is necessary, file it expressly subject to the right to arbitrate. An unconditional counterclaim looks like a party that has chosen court.
The overarching principle is consistency. Every action should point toward the same conclusion: this party wants arbitration, not court. Mixed signals are what get the right waived.
Anti-Waiver Clauses Don’t Rescue Heavy Litigation
Many contracts include a no-waiver provision, usually buried in the miscellaneous section, saying that a party’s failure to exercise a right at any given time doesn’t prevent it from exercising that right later. These clauses carry some weight, but they aren’t an unlimited license to litigate and switch to arbitration whenever the mood changes.
Courts treat the clause as one factor in the overall analysis. When a party has filed substantive motions, taken depositions, exchanged discovery, and participated in months of pretrial proceedings, the anti-waiver language won’t save them. The clause itself can be waived through the same conduct that waives the underlying arbitration right. At some point, behavior overwhelms boilerplate. The clause is most useful in marginal cases where litigation activity was minimal and delay was short; counting on it while actively litigating is a strategy that rarely survives judicial scrutiny.