Commercial Division Rejects Conclusory Claims of “Grand Fraudulent Scheme” Attempting to Avoid Arbitration

The so-called doctrine of severability as applied to agreements to arbitrate disputes is well-recognized. Basically, provisions that require disputes to be resolved by arbitration that are contained as part of broader contracts are viewed separately from any other provision of the contract for purposes of determining any challenge to arbitration based upon fraud or fraudulent inducement. Generally, if the alleged fraud did not particularly target the arbitration provision itself, courts will not allow a party to the broader contract in which that provision is contained to avoid arbitration based upon a claim of fraudulent inducement. I have written often about these concepts. See, e.g., Federal Court Rejects Challenge to Arbitration Clause Based Upon Alleged Fraudulent Inducement; Special Rules for Nullifying Arbitration Agreements for Alleged Fraud; Courts Reinforce Strict Standards for Nullifying Arbitration Provision Based Upon Fraud; Second Department Reinforces Vitality of Arbitration Clauses in Face of Fraud Claim.

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