Originally from Dispute Resolution Journal

Until recently, the landmark 1977 Liverpool decision had cast a lasting shadow over public sector labor arbitration in the state of New York. In Liverpool, the New York Court of Appeals established a two-step procedure for determining arbitrability of public sector disputes. The effect was what author Richard Gaba calls a “vise-like” judicial grip on public sector arbitration. In this article, Gaba discusses the implications of the recent Watertown and Indian River decisions, which effectively ease judicial scrutiny of the issue of arbitrability, and also includes a comprehensive look at previous decisions.

Parties seeking arbitration of public sector labor disputes are elated over the Court of Appeals decisions in the Watertown and Indian River cases1 which now permit arbitrators to handle cases without delay and without the usual anxiety over judicial meddling in the arbitration process.

It took almost 25 years to get there, but at long last our highest court has loosened its vise-like grip on public sector arbitration. No longer will it apply its previous policy of intense judicial scrutiny to the question of arbitrability. If the parties to a collective bargaining agreement had the legal authority to agree, and actually did agree upon arbitration as the means of settling a specific dispute, then the “Liverpool Two-Step,” (a mating dance choreographed by the court in 1977), will surely glide the parties to a neutral, nonjudicial forum in which the issue of arbitrability will be decided. This is not to say that the court has abandoned its sacred trust of deciding whether there is some public policy set forth in the Constitution, the statutes, or the decisions of our courts that bars arbitration, notwithstanding the parties’ willingness to dance together.

In its 1977 landmark Liverpool2 decision, the New York Court of Appeals established a two-step procedure for determining arbitrability of public sector labor disputes. The first step required the court to determine whether arbitration of the particular claim was authorized under the Taylor Law.3 The second step required a determination of whether that authority was, in fact, exercised by the parties and whether they actually agreed to arbitrate their disputes as to this particular subject matter.

In Liverpool the court said that in arbitrations which proceed under the authority of the Taylor Law, the question of whether the arbitration clause is broad enough to include the particular dispute is to be determined by the courts. In addition, the Liverpool court held that arbitration in the public sector was too new to merit a presumption of arbitrability such as existed in the private sector.

On April 1, 1999, the Court of Appeals decided the Watertown and Indian River cases, holding that in public sector labor cases arising under the Taylor Law the issue of arbitrability will no longer be subject to the intense degree of judicial scrutiny that was applied under its 1977 holding in Liverpool. In so deciding the court departed somewhat from its long-held position that the issue of arbitrability is for the courts to decide.