Arbitration is usually based upon the parties' consent. The parties to a written agreement provide for arbitration of future disputes or submit an existing dispute to arbitration. But several New York statutes require that the parties' contract contain a binding arbitration-type provision, or alternatively allow one party to demand binding arbitration even though the parties never agreed to do so.

Nonconsensual Arbitration

Nonconsensual arbitration is found in several New York state statutes. The Taylor Law (Civil Service Law §209) allows nonconsensual arbitration as a last resort: After engaging with the Public Employment Relations Board, arbitrators can write provisions of a contract between public sector unions and a public body. The Lemon Law (General Business Law §198-a(k)) allows, but does not compel, arbitration between a consumer and an auto manufacturer. The Prompt Payment Act (PPA) (General Business Law §756, et seq.) allows, but does not compel, arbitration concerning certain construction disputes. Arbitration of oil spill clean-up costs occurs per regulation under Navigation Law §185. Regulation requires vehicle insurance policies to contain No Fault arbitration provisions; for certain claims, litigation is still possible. The standard New York Fire Insurance Policy has for over a century provided for insured and insurer appraisal of loss and, when appraisers disagree, appointment of a neutral party to determine the value of damaged property.

Narrowing or Expanding the Scope of the Dispute

The Legislature believes nonconsensual statutory arbitration can expeditiously and economically resolve defined issues. With this limitation in mind, the Legislature sometimes provides that only portions of disputes be arbitrated. For example, a Taylor Law arbitration award may only concern limited issues, depending upon the specific public union. A New York Fire Insurance Policy appraisal dispute of insured property loss does not deal with coverage issues. A PPA demand for arbitration only concerns PPA violations, not all construction project disputes. Where a party includes in his nonconsensual arbitration demand issues outside those specified by the law, he invites judicial intervention to narrow the scope, thwarting speedy resolution.