As a general proposition, parties to an arbitration contract are completely free to agree upon the identity of the arbitrators, and New York courts have therefore regularly refused to disqualify arbitrators on grounds of conflict of interest or partiality even in cases where the contract expressly designates a single arbitrator employed by one of the parties.
Parties had a contract which contained a clause designating one of defendant's officials as the final decision-maker for any contractual dispute before the parties, and that submission to that official was required before any actual litigation could be initiated. The parties had a dispute, and plaintiff sued defendant, claiming that the clause and subsequent policy violated public policy by usurping judicial power. Lower court found for the defendant, and that there was no transgression of public policy. Plaintiff appeals from this ruling.Whether the particular clause in the parties' contract violated public policy.
Whether the particular clause in the parties' contract violated public policy.
No, the clause in the parties' contract did not violate public policy
The court continued that a natural and unstrained reading of the contract indicated that both parties contemplated that the courts would have jurisdiction to review the engineer's decision, thus public policy had not been transgressed. The court held that omission of the standard of review applicable to the engineer's decision did not render the alternative dispute resolution clause unenforceable.