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DELEGATION CLAUSES, PLACING THE DETERMINATION OF ARBITRABILITY IN THE ARBITRATOR, NOT THE COURT, ENFORCEABLE UNDER FEDERAL ARBITRATION ACT.

The Court of Appeals, in a full-fledged opinion by Judge Stein, reversing the Appellate Division, determined “delegation clauses” in insurance-related contracts were enforceable under the Federal Arbitration Act (FAA). The “delegation clauses” required that the initial determination whether a dispute is arbitrable is to be made by the arbitrator, not the court. Before reaching the merits, and after explaining the history of the FAA and the McCarran-Ferguson Act, the Court of Appeals decided, under the facts, the McCarran-Ferguson Act did not remove the matter from the jurisdiction of the FAA:

 

… [A] review of the record reveals that [the insureds] did not specifically direct any challenge to the delegation clauses empowering the arbitrators to determine gateway questions of arbitrability … . Those delegation provisions, which state that the arbitrators “have exclusive jurisdiction over the entire matter in dispute, including any question as to its arbitrability,” are valid because the parties “clearly and unmistakably” agreed to arbitrate arbitrability … . As the delegation clauses are severable from the remainder of the agreements to arbitrate, we must enforce them according to their terms and, under these circumstances, the question of arbitrability is one for the arbitrators … . …

… [W]e hold that the FAA applies to the [contracts in issue] because it does not “invalidate, impair, or supersede” … any insurance regulations and, consequently, the McCarran-Ferguson Act is not triggered … . Further, because the parties clearly and unmistakably delegated the question of arbitrability and enforceability of the arbitration clauses to the arbitrators — in provisions that were not specifically challenged by the insureds — the FAA mandates that the arbitration provisions be enforced as written. Matter of Monarch Consulting, Inc. v National Union Fire Ins. Co. of Pittsburgh, PA, 2016 NY Slip Op 01209, CtApp 2-18-16

 

ARBITRATION (DELEGATION CLAUSES IN INSURANCE-RELATED AGREEMENTS, PLACING THE DECISION WHETHER A MATTER IS ARBITRABLE IN THE ARBITRATOR, ENFORCEABLE UNDER THE FEDERAL ARBITRATION ACT)/FEDERAL ARBITRATION ACT (DELEGATION CLAUSES IN INSURANCE-RELATED AGREEMENTS, PLACING THE DECISION WHETHER A MATTER IS ARBITRABLE IN THE HANDS OF THE ARBITRATOR, ENFORCEABLE)/INSURANCE LAW (DELEGATION CLAUSES IN INSURANCE-RELATED AGREEMENTS, PLACING THE DECISION WHETHER A MATTER IS ARBITRABLE IN THE HANDS OF THE ARBITRATOR, ENFORCEABLE UNDER THE FEDERAL ARBITRATION ACT)

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