In a per curiam opinion issued February 8, 2023 in Cnty. of Passaic v. Horizon Healthcare Servs., Inc., No. A-0952-21, 2023 N.J. Super. LEXIS 10, at *3 (App. Div. Feb. 8, 2023), the New Jersey Appellate Division held that an arbitration provision need not contain an express waiver of the right to seek relief in a judicial forum to be enforceable when the parties to a commercial contract “are sophisticated and possess relatively equal bargaining power.”
This is the first published opinion by an appellate panel to weigh in on whether the New Jersey Supreme Court’s decision in Atalese v. U.S. Legal Services Group, L.P., 219 N.J. 430 (2014) established a bright line rule that all commercial contracts containing an arbitration provision must include explicit language that the parties are waiving the right to adjudicate certain disputes in a court of law to be enforceable. The Appellate Division rejected the plaintiff’s assertion that Atalese barred enforcement of the arbitration agreement at issue because it lacked an explicit waiver of judicial access, observing that Atalese focused on, among other things, the unequal relationship between contracting parties outside of a commercial setting. In Atalese, the New Jersey Supreme Court elucidated the standard for enforceability of an arbitration clause in a consumer contract, requiring clear and unambiguous language that the consumer was waiving the right to judicial recourse.
Central to the Appellate Division’s opinion was that the “concern for those not versed in the law or not necessarily aware of the fact that an agreement to arbitrate may preclude the right to sue in a court or invoke the inestimable right of trial by jury, on the other hand, vanishes when considering individually-negotiated contracts between sophisticated parties - often represented by counsel at the formation stage - possessing relatively similar bargaining power.” Indeed, the parties in Cnty. of Passaic v. Horizon Healthcare Servs., Inc. were “represented by counsel at all relevant stages of their negotiations and during the formation of the relevant contract” and understood the difference between the right to seek relief in a court of law and “being relegated to arbitration under AAA’s commercial rules.”
While this decision provides clarity as to whether an explicit waiver is needed for enforcement of an arbitration provision in a commercial setting, the Supreme Court may yet weigh in on the issue given the significant attention the decision has garnered from the legal community.