Court Construes Parties’ Agreement To Allow New York State Courts To Rule On Statute Of Limitations Defense

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The issue confronting the court in In re ROM Reinsurance Management Co. v. Continental Insurance Company was whether the timeliness of a demand for arbitration was a determination for the Court or for the arbitrators. The parties agreed that the “arbitration laws of New York State” shall govern the parties’ arbitration. Under New York’s arbitration laws, in contrast to the Federal Arbitration Act, resolution of a statute of limitations defense can be raised as a threshold issue in the courts. In contrast, under the FAA, the limitations defense is presumptively reserved to the arbitrator, not a court, except where the parties agree to leave timeliness issues to the court. The parties’ intent to have New York state law govern enforcement of the agreement, which includes the statute of limitation defense, must be stated with “critical language concerning enforcement.” Otherwise, all controversies, including issues of timeliness, are subjects for arbitration. The ROM court found that the provision at issue was sufficient. The court further reasoned that its ruling was consistent with the FAA’s goals because it enforced the agreement under the terms agreed upon by the parties, even if the result would be that the arbitration is stayed whereas it would have gone forward under the FAA. In re ROM Reinsurance Management Co. v. Continental Insurance Co., No. 11809 654480/12 (N.Y. App. Div. Mar. 11, 2014).

 

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Carlton Fields Jorden Burt on:

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