New York Appellate Court Denies Plaintiff’s Motion to Stay Arbitration on Arbitrability Grounds

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Life Receivables Trust v. Goshawk Syndicate 102 at Lloyd’s

(New York Appellate Division, 1st Dept., October 13, 2009)


A New York appellate court upheld a denial of plaintiff’s motion to stay or enjoin arbitration before the American Arbitration Association.  The agreement provides that all disputes be referred to arbitration under the AAA.  While arbitrability is often a judicial determination, the court held because the parties incorporated by referenced the AAA rules, which allows the tribunal to rule on its own jurisdiction, the arbitrators were permitted to determine arbitrability.    The plaintiff argued that the language included in the agreement giving the parties the right to challenge the arbitrator’s determination based on errors of law was an impermissible expansion of the scope of judicial review under the Federal Arbitration Act.  The court rejected plaintiff’s argument finding the issue is included in the arbitrability issues, which the tribunal is permitted to determine.  In addition, the court noted that policy favors arbitration as a means to conserve time and resources.

For a copy of the decision click here

Kim Whistler and Sharon Angelino