Commercial Division Blog

Posted: May 28, 2017 / Categories Commercial, Arbitation, Mediation and Other ADR

Under AAA Rules, Question of Arbitrability is for Arbitrator in First Instance

On May 23, 2017, Justice Ostrager of the New York County Commercial Division issued a decision in Port Authority of N.Y. & NJ v. 2 World Trade Center LLC, 2017 NY Slip Op. 31121(U), refusing to stay an arbitration because the question of arbitrability was for the arbitrator in the first instance, explaining:

It is a well-settled proposition that the question of arbitrability is an issue generally for judicial determination in the first instance. Nevertheless, an important legal and practical exception has evolved which recognizes, respects and enforces a commitment by the parties to arbitrate even that issue when they clearly and unmistakably so provide. Thus, the Court must examine whether the parties evinced a clear and unmistakable agreement to arbitrate arbitrability as part of their alternative dispute resolution choice in the MDA Agreement.

When the parties' agreement specifically incorporates by reference the AAA rules, which provide that the tribunal shall have the power to rule on its own jurisdiction, including objections with respect to the existence, scope or validity of the arbitration agreement, and employs language referring all disputes to arbitration, courts will leave the question of arbitrability to the arbitrators. While the Port Authority attempts to distinguish the language of the arbitration clause in this case from the Life Receivables Trust case, the Court finds the Port Authority's argument unpersuasive.

(Internal quotations and citations omitted).