Smith Barney Shearson Inc. v. Sacharow

In Smith Barney Shearson Inc. v. Sacharow, 91 NY2d 39 (1997), the question before the court was whether a New York choice of law clause required the court to determine if a controversy was eligible for arbitration under an NASD rule precluding the arbitration of claims more than six years old. The Sacharow court noted that six-year eligibility rule created "a substantive feature that may affect the right to arbitrate," and that the issue was therefore presumptively for the court to decide. However, despite this presumption, based on the broad arbitration clause, the court found an intent to submit all issues to arbitration, and that the arbitrator should determine whether the six-year eligibility rule precluded arbitration. The Sacharow court reasoned that "while the choice of law clause incorporates substantive New York principles, it does not also pull in conflicting restrictions on the scope of the authority of the arbitrators and the competence of parties to contract for plenary dispute resolution." (91 NY2d at 49.)