Arbitration is a form of alternative dispute resolution and may be used to settle a dispute without using the courts. Article 75 of the New York Civil Practice Law and Rules contains the rules and procedures governing arbitrations in New York State. Importantly, there are rules and cases regarding arbitration agreements and when they will be enforced.
All arbitration agreements must meet certain basic criteria. The arbitration agreement between the parties will either submit an existing or future controversy to arbitration. In the private sector there is a presumption against arbitration, and agreements must clearly express the intent to arbitrate instead of using the courts. This presumption does not exist in the public sector. It is also possible that a court will look to the industry’s custom to determine the intent of the parties.
Courts also typically interpret arbitration clauses broadly. This means that they will not exclude an issue from arbitration, unless the agreement expressly indicates the claim is not subject to arbitration. In deciding whether an issue is subject to arbitration, a court will determine if the subject matter of the dispute is related to the general subject matter of the arbitration agreement.
It is possible to challenge the validity of an arbitration agreement, and the court, not the arbitrator, decides whether the agreement is enforceable between the parties. For example, courts will not enforce an arbitration agreement if it is against public policy. In this context, New York courts have not compelled arbitration in claims involving securities law violations, estate distribution, antitrust laws, usury claims, and attorney discipline. On the other hand, issues involving spousal maintenance and child support are subject to arbitration.