Arbitration Agreements Should Identify Administering Institution as a Result of New York Appellate Court Ruling

Article by Jeffrey Sarles , William H. Knull, III , Archis A. Parasharami and Philip Allen Lacovara

Originally published August 30, 2010

Keywords: Arbitration agreement, administering institution, AAA, Nahmani

A New York state appellate court has ruled that a contract clause calling for arbitration "in accordance with the commercial rules of the American Arbitration Association" is insufficient to provide that the arbitration will be administered by the AAA. The decision appears questionable as the AAA rules provide that "[w]hen parties agree to arbitrate under these rules ... they thereby authorize the AAA to administer the arbitration." Thus, it is likely to be appealed further.

There can be significant practical benefits to the parties from having an organization such as the AAA, JAMS, the ICC, or other organization administer an arbitration. Therefore, if the parties want any arbitration of their disputes to be administered by an arbitration-service provider, it would be good practice to include a specific statement that the arbitration is to be administered by the AAA (or another institution) under that institution's rules. The case is Nachmani v. By Design, LLC, 901 N.Y.S.2d 838 (1st Dep't. 2010).

Learn more about our International Arbitration practice.

Visit us at www.mayerbrown.com.

Copyright 2010. Mayer Brown LLP, Mayer Brown International LLP, Mayer Brown JSM and/or Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.

Mayer Brown is a global legal services organization comprising legal practices that are separate...