Deciding Arbitrability

Case Law Update: Who decides whether an arbitration clause is rendered unenforceable by an illegal provision – the court or the arbitrator?

In Life Receivables Trust v. Goshawk Syndicate 102 at Lloyd’s, 14 N.Y.3d 850, 901 NY.S.2d 133 (May 4, 2010), the parties included a provision in their arbitration agreement that the parties had the right to challenge an arbitration decision on the grounds that the panel made an error of law. This type of provision appears very logical and at first blush, it is difficult to understand why a provision such as this agreed to by the parties would not be enforceable.