A New York district court rejected a party's contention that arbitration in a certain forum would be unfair. The complaint failed to show fraud, duress or unconscionability, and procedural safeguards exist to preclude a biased arbitration proceeding.

In Carboni v. Lake, No. 06 Civ. 15488(RJH), 2008 WL 2513914 (S.D. N.Y. June 20, 2008), Carboni filed an action against Lake for defamation and tortious interference with business relations. The Court determined that the dispute was subject to arbitration with the New York Mercantile Exchange (NYMEX).

Carboni filed an arbitration claim with the National Futures Association (NFA). In response, Lake filed a motion to stay the NFA arbitration and instructed Carboni that his claim should be directed to the NYMEX. Carboni argued that his arbitration claim under the NFA should be allowed to proceed because NYMEX arbitration proceedings could not be impartial due to Lake's considerable power and influence within the NYMEX.

Carboni argued that Lake is one of the largest clearing firms on the NYMEX and processes a large volume of trading floor orders. Further, Lake had influence and control over NYMEX employees, Carboni alleged. Under NYMEX rules, the panel must be composed of NYMEX members or NYMEX members' employees. Carboni argued that the "evident partiality of the arbitrations can be reasonably inferred."

The Court noted that arbitration agreements may be invalidated by showing of fraud, duress or unconscionability. But here, Carboni's allegations about Lake's influential position in the NYMEX did not rise to the level of fraud, duress or unconscionability. Further, the Court noted that the NYMEX arbitration rules had protections and safeguards against biased arbitration proceedings.

Carboni did not make a sufficient showing that a NYMEX arbitration would be impartial. Accordingly, the Court granted Lake's motion and ordered Caboni to withdraw his complaint from the NFA.