Arbitration Clauses in Pennsylvania Contracts: What Chilutti v. Uber Changed in 2026, and What It Didn't

By Christopher D. Mandracchia, Esq.
CDM LAW | Conshohocken, Pennsylvania
Last Updated: November 2, 2026

Hypothetical: A mechanical subcontractor in Montgomery County finishes a large commercial project and is owed roughly $400,000. The general contractor disputes the change orders and stops paying. The subcontractor files suit in the Montgomery County Court of Common Pleas, expecting a jury to hear the case.

The general contractor responds with a motion to compel arbitration. The clause is on page 14 of a master subcontract the subcontractor signed three years earlier and never reread. The judge grants the motion and stays the lawsuit. The subcontractor's first instinct is to appeal immediately.

In January 2026, the Supreme Court of Pennsylvania made clear that, in most cases, that immediate appeal is not available.

Arbitration clauses appear in construction subcontracts, commercial leases, franchise agreements, employment agreements, operating agreements, vendor contracts, and nearly every set of online terms of service. A single sentence can decide whether a dispute is heard by a jury or a private arbitrator, how much discovery each side gets, what the process costs, and whether anyone can meaningfully appeal the result. For businesses and individuals in Conshohocken, Montgomery County, Philadelphia, and across southeastern Pennsylvania, the first ruling on arbitration is often the most consequential ruling in the case.

What Pennsylvania Law Says About Arbitration Clauses

Are arbitration clauses enforceable in Pennsylvania? Yes. Pennsylvania courts generally enforce written agreements to arbitrate, but only if a valid agreement exists and the dispute falls within its scope. The party seeking arbitration has to establish both.

Two bodies of law usually apply at once.

The Federal Arbitration Act. For contracts "involving commerce," which covers most business transactions, the Federal Arbitration Act, 9 U.S.C. § 2, makes written arbitration agreements enforceable "save upon such grounds as exist at law or in equity for the revocation of any contract." The FAA applies in state court as well as federal court. In Kindred Nursing Centers L.P. v. Clark (2017), the U.S. Supreme Court held that the FAA preempts state rules that single out arbitration agreements for disfavored treatment.

Pennsylvania's arbitration statute. Chapter 73 of Title 42 of the Pennsylvania Consolidated Statutes governs arbitration in Pennsylvania. One provision surprises many business owners: under 42 Pa.C.S. § 7302(a), an agreement to arbitrate is conclusively presumed to be an agreement to common law arbitration unless it is in writing and expressly provides for statutory arbitration.

That label matters most after the arbitrator rules. Under 42 Pa.C.S. § 7341, a common law arbitration award is binding and may be vacated or modified only if a party clearly shows it was denied a hearing, or that fraud, misconduct, corruption, or another irregularity caused an unjust, inequitable, or unconscionable award. An arbitrator's ordinary mistake of law or fact is generally not enough.

The two-part test. When one side moves to compel arbitration, Pennsylvania courts ask two questions: first, whether a valid agreement to arbitrate exists, and second, whether the dispute falls within its scope. Von Sick v. ANC Builders, Inc., 2023 PA Super 116 (quoting Fineman, Krekstein & Harris, P.C. v. Perr, 278 A.3d 385 (Pa. Super. 2022)). The Superior Court has also repeated that arbitration agreements are strictly construed and not extended by implication. If the court orders arbitration, the lawsuit is stayed (42 Pa.C.S. § 7304(d)).

What Chilutti v. Uber Decided

Can you immediately appeal an order compelling arbitration in Pennsylvania? Generally, no. In Chilutti v. Uber Techs., Inc., 349 A.3d 826 (Pa. 2026), decided January 21, 2026, the Supreme Court of Pennsylvania held that a trial court order granting a petition to compel arbitration and staying court proceedings does not satisfy the third prong of the collateral order doctrine under Pennsylvania Rule of Appellate Procedure 313. As a result, the order is not immediately appealable.

The case arose after Shannon Chilutti was injured during an Uber ride. She and Keith Chilutti sued Uber, and Uber petitioned to compel arbitration, contending the Chiluttis had agreed to arbitrate their claims when they enrolled with Uber. The trial court granted the petition and stayed the court proceedings pending arbitration. The Chiluttis appealed, arguing that the order was an immediately appealable collateral order and that no valid arbitration agreement existed. In 2023, the Superior Court, sitting en banc, agreed and reversed, announcing demanding requirements for enforcing arbitration agreements formed online. The Supreme Court never reached those requirements. Writing for every participating justice, Justice Brobson concluded that the Superior Court lacked jurisdiction to hear the appeal in the first place.

The Court's reasoning turned on the third prong of the collateral order doctrine, which asks whether the claim would be irreparably lost if review were postponed until final judgment. The Court held that it would not be, because the propriety of an order compelling arbitration can be reviewed on appeal after the trial court enters a final judgment following arbitration. Chilutti, 349 A.3d at 828. The Court also held that the Superior Court erred by applying the limited standard of review for common law arbitration awards in 42 Pa.C.S. § 7341 to decide whether postponing review would cause irreparable loss. That narrow standard governs challenges to an arbitrator's award; it does not govern appellate review of the trial court's order compelling arbitration, which the Court explained is reviewed de novo. The Court vacated the Superior Court's decision and remanded with instructions to quash the appeal, which the Superior Court did on April 10, 2026.

The asymmetry that results. If a court denies a motion to compel arbitration, the party that wanted arbitration can appeal right away. An order denying an application to compel arbitration is appealable by statute (42 Pa.C.S. § 7320(a)(1); § 7321.29(a), which § 7342(a) makes applicable to common law arbitration), and Pa.R.A.P. 311(a)(8) permits an appeal as of right from orders made appealable by statute. After Chilutti, the party resisting arbitration generally must arbitrate first and appeal later.

Federal law works the same way. Under 9 U.S.C. § 16, orders denying arbitration are appealable, while interlocutory orders compelling arbitration generally are not. In Coinbase, Inc. v. Bielski (2023), the U.S. Supreme Court added that a federal district court must pause its proceedings while an appeal from the denial of a motion to compel arbitration is pending.

What Chilutti Did Not Decide: Online Arbitration Agreements

Are arbitration clauses in online terms of service enforceable in Pennsylvania? Often, yes, but the standard is unsettled. Because the Supreme Court vacated the Superior Court's 2023 decision on jurisdictional grounds, that decision's heightened requirements for online agreements, including clear notice that the user was giving up the right to a jury trial, are no longer binding precedent. The Supreme Court did not adopt or reject them.

Expect continued litigation on this point. Consumers and employees will argue the 2023 reasoning remains persuasive. Companies will argue that ordinary contract-formation principles control, and that a rule demanding more of arbitration agreements than of other contracts raises the federal-preemption concerns identified in Kindred. Until an appellate court squarely resolves the question again, outcomes may vary by courtroom and by how the online agreement was presented.

How the Rule Works in the Real World

Return to the hypothetical subcontractor. Assuming the clause is valid and covers the dispute, the practical path now looks like this:

1. The case goes to arbitration, and the court action is stayed.
2. The subcontractor presents its claim to an arbitrator, under whatever rules and fee structure the contract adopts.
3. After the award, a party may ask the court to confirm, vacate, or modify it.
4. Only after final judgment can the subcontractor ask an appellate court to revisit whether arbitration should have been compelled at all.

That path is lawful, but it is expensive if the original order was wrong. The practical lesson is that the trial-court hearing on the motion to compel is the main event. The evidentiary record built there, on contract formation, assent, scope, and defenses, is often the record an appellate court will review years later.

The ruling also affects strategy on the other side. A business that wants arbitration should raise it at the outset. Litigating in court and then pivoting to arbitration invites a waiver argument. In federal cases under the FAA, Morgan v. Sundance, Inc. (2022) held that a party claiming waiver does not need to show prejudice. Pennsylvania state courts apply their own waiver analysis, and the safest course is to assert the right to arbitrate promptly.

What Courts Consider on a Motion to Compel Arbitration

• Formation and assent. Did the party sign, click, or otherwise agree? Was the arbitration term presented clearly enough to bind them?
• Who is bound. Disputes often involve owners, guarantors, affiliates, or subcontractors who never signed the contract containing the clause.
• Scope. "Any dispute arising out of or relating to this agreement" reaches much further than "disputes regarding payment under Section 5."
• Competing clauses. Master agreements, purchase orders, and later amendments can contain conflicting forum-selection or dispute-resolution terms.
• Defenses. Ordinary contract defenses, such as fraud directed at the arbitration agreement itself or unconscionability, remain available under the FAA's savings clause.
• Statutory carve-outs. Under the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, 9 U.S.C. § 402, a person alleging sexual harassment or sexual assault may elect not to be bound by a predispute arbitration agreement, and a court, not an arbitrator, decides whether that law applies.

Common Mistakes

• Signing without reading the dispute-resolution section. Arbitration, jury-waiver, forum-selection, and fee-shifting clauses are frequently grouped near the signature page, often alongside liquidated-damages and buyout provisions that raise their own enforcement questions.
• Using a boilerplate clause that does not say what kind of arbitration it is. Silence defaults to common law arbitration and its narrow award review.
• Filing suit, litigating for months, then demanding arbitration. Delay creates a waiver fight.
• Assuming a bad arbitration ruling can be fixed on immediate appeal. After Chilutti, it usually cannot.
• Weak online-assent records. Companies that cannot prove what a customer saw and clicked, and when, give opponents their best argument.

Litigation Considerations

• Collect every governing document. Include the signed agreement, amendments, purchase orders, statements of work, and any online terms in effect when the relationship began.
• Preserve proof of assent. For online agreements, that means screen captures, version histories, and click or acceptance logs.
• Keep written communications professional. Emails and texts become exhibits in court and in arbitration.
• Document damages early. Invoices, change orders, payment histories, and lost-profit support carry the case in either forum.
• Watch the calendar. Statutes of limitation and contractual notice deadlines still apply, and a demand for arbitration may need to be filed within them.
• Read the fee provisions. Arbitration filing fees, arbitrator compensation, and attorney-fee clauses can change settlement math.
• Notify insurers. Some policies require prompt notice of a claim or demand, including arbitration demands.
• Consider federal jurisdiction. Parties with diverse citizenship and enough in controversy may find themselves in the U.S. District Court for the Eastern District of Pennsylvania. There, under Smith v. Spizzirri (2024), a court that finds a dispute arbitrable must stay the case, rather than dismiss it, when a party requests a stay.

Why Early Legal Review Matters

Arbitration disputes are often decided by documents and choices made long before anyone files a motion. A lawyer reviewing a contract before signature can propose a clause that fits the client's likely disputes: statutory or common law arbitration, the governing rules, the location, cost allocation, and carve-outs for emergency court relief. When a dispute is brewing, early review can identify whether arbitration helps or hurts, whether a waiver argument exists, and what record must be built for the motion hearing. That work is usually far less expensive than arbitrating first and appealing years later.

How CDM LAW Approaches These Disputes

CDM LAW is a Conshohocken litigation and trial practice that represents businesses and individuals in contract, commercial, and construction disputes in Pennsylvania state courts and in the U.S. District Courts for the Eastern and Middle Districts of Pennsylvania. Christopher D. Mandracchia, Esq., a former Berks County Assistant District Attorney, approaches arbitration questions as trial questions: what the documents say, what the evidence will prove, and which forum serves the client's goals. The firm also drafts and reviews contracts and serves as outside general counsel, which allows dispute-resolution terms to be written with eventual enforcement in mind.

Frequently Asked Questions

Can I appeal an order compelling arbitration in Pennsylvania?

Generally not right away. Under Chilutti v. Uber Techs., Inc., 349 A.3d 826 (Pa. 2026), an order compelling arbitration and staying litigation does not satisfy the collateral order doctrine and is not immediately appealable. The propriety of the order can be reviewed on appeal after the trial court enters a final judgment following arbitration.

Can a business appeal if the court refuses to compel arbitration?

Yes. An order denying a motion to compel arbitration is appealable by statute under 42 Pa.C.S. §§ 7320(a)(1) and 7321.29(a), and Pa.R.A.P. 311(a)(8).

Are arbitration clauses in online terms of service enforceable in Pennsylvania?

Often, but the standard is unsettled. The Superior Court's 2023 heightened requirements in Chilutti were vacated in 2026 on jurisdictional grounds, so they are no longer binding, and the Supreme Court did not decide the merits.

Can an arbitration award be overturned in Pennsylvania?

Rarely. A common law arbitration award may be vacated or modified only on a clear showing that a party was denied a hearing, or that fraud, misconduct, corruption, or another irregularity caused an unjust award (42 Pa.C.S. § 7341).

Can a party lose the right to arbitrate by filing a lawsuit?

It can. Courts may find waiver when a party litigates in court instead of promptly seeking arbitration. Under the FAA, Morgan v. Sundance (2022) held that prejudice to the other side is not required.

Does the Federal Arbitration Act apply in Pennsylvania state court?

Yes, for contracts involving interstate commerce. State courts must enforce covered arbitration agreements and cannot apply rules that single out arbitration for disfavored treatment (Kindred Nursing Centers v. Clark, 2017).

Conclusion

Chilutti v. Uber did not decide whether online arbitration agreements are enforceable. It decided something with broader day-to-day impact: in most cases, the party ordered to arbitrate must go through the arbitration before an appellate court will review that order. That raises the stakes of contract drafting, of the first response to a lawsuit or demand, and of the motion-to-compel hearing itself.

Legal disputes often turn on the language of the governing documents, the available evidence, and decisions made before litigation begins. Individuals and businesses confronting a significant Pennsylvania contract or arbitration dispute may contact CDM LAW in Conshohocken to discuss their circumstances with a Pennsylvania litigation attorney.

Sources and Authorities

• Chilutti v. Uber Techs., Inc., 349 A.3d 826 (Pa. 2026)
• Chilutti v. Uber Techs., Inc., No. 1023 EDA 2021 (Pa. Super. Apr. 10, 2026) (non-precedential memorandum on remand)
• Von Sick v. ANC Builders, Inc., 2023 PA Super 116
• 42 Pa.C.S. Chapter 73 (Arbitration), including §§ 7302, 7304, 7320, 7321.29, 7341, 7342
• Pa.R.A.P. 311
• Federal Arbitration Act: 9 U.S.C. § 2, § 16, § 402
• Coinbase, Inc. v. Bielski (U.S. 2023); Smith v. Spizzirri (U.S. 2024); Morgan v. Sundance, Inc. (U.S. 2022); Kindred Nursing Centers L.P. v. Clark (U.S. 2017)

This article is provided for general informational purposes only and does not constitute legal advice. The law may change, and the application of law depends upon the specific facts and circumstances of each matter. Reading this article does not create an attorney-client relationship with CDM LAW or Christopher D. Mandracchia, Esq.

Note on legal authority: The statutes, rules, and court decisions cited in this article are believed to be accurate as of the "Last Updated" date above, but legal authority can be amended, reversed, superseded, or reinterpreted at any time. Readers should independently verify the accuracy and current status of any authority cited before relying on it, and should consult a licensed Pennsylvania attorney about their specific situation.