States Must Arbitrate Tobacco Claims

An arbitration clause is, apparently, an arbitration clause — even when it’s in a settlement agreement between sovereign states and giant industries.  So the New York Appellate Division has thrown out a lawsuit by the state of New York arising out of the $206 billion tobacco settlement.  An arbitral panel ruled that the states, which together get about $6.2 billion a year from the settlement, may see a $1.1 billion reduction based on an alleged failure to enforce some aspects of the settlement.  New York had claimed a right to litigated the issue in court.  Whether the payments will be reduced still has not been decided.

[Frank Snyder]