In In re UBS Warburg LLC & Auerbach, Pollak & Richardson, Inc., New York Law Journal, Oct. 22, 2001, p. 24, col. 4, is an important recent case from New York County Supreme Court that, although not an appellate case, seems to have shown a way to harmony between New York and federal law concerning the relationship between arbitration and the courts. It overturned an arbitration award, but without intruding unduly into the decision-making process that, in arbitration, the parties have assigned to the arbitrator, not the court. It also reflects a helpful clarification and positive development in New York arbitration law.
In states around the country two laws of arbitration compete for application: the Federal Arbitration Act (FAA) and the law of the state. Federal law usually applies because of the doctrine of preemption and because the Supreme Court has very liberally construed the FAA’s limitation to “contract[s] evidencing a transaction involving commerce.” See Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995).
