Decision Lowers Standard for Enforceability of Arb Clauses in Commercial Contracts
Although prior unpublished decisions have reached similar conclusions, the County of Passaic case resulted in the first published Appellate Division decision containing a rule pronouncement regarding the enforceability of arbitration provisions in the commercial context.
April 10, 2023 at 01:00 PM
8 minute read
ContractsThe New Jersey Appellate Division, in a recent decision, lowered the standard for enforceability of contractual arbitration provisions in the commercial setting, continuing a trend in New Jersey law of relaxing scrutiny of such provisions in the non-consumer or employment context. In County of Passaic v. Horizon Healthcare Services, (N.J. Super. Ct. App. Div. Feb. 8, 2023), the court held that a contractual arbitration provision that does not include an express waiver of the parties' right to seek relief in a court of law is nevertheless enforceable as between two sophisticated commercial parties of relatively equal bargaining power. This decision appears to be a departure from the contractual language that was previously deemed by the New Jersey Supreme Court necessary to enforce an arbitration provision in a commercial contract. Moreover, although prior unpublished decisions have reached similar conclusions, the County of Passaic case resulted in the first published Appellate Division decision containing a rule pronouncement regarding the enforceability of arbitration provisions in the commercial context.
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