Until now, it would have been the common understanding among those who deal with arbitration clauses that a provision in a contract stating that any dispute shall be settled by binding arbitration “in accordance with the commercial rules of the American Arbitration Association” would be clear. In light of the recent Appellate Division, First Department, decision in Nachmani v. By Design, LLC,1 that is no longer the case.
In Nachmani, a unanimous panel held that “in accordance with the commercial rules of the American Arbitration Association” is only “a choice of law clause” and is not an agreement that the arbitration be administered by the American Arbitration Association (AAA).2
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