## Facts

- Weinrott and Carp entered a licensing and joint-venture agreement for use of a construction process for certain prefabricated-panel buildings.
- The agreement included a broad arbitration clause covering all disputes or claims arising under the contract, including issues of interpretation and performance.
- Carp alleged the contract was fraudulently induced by misrepresentations about the process’s capabilities, approvals, ownership, prior use, and related experience.
- Weinrott commenced arbitration in 1967; Carp sought a judicial stay, arguing the contract (and thus arbitration) was induced by fraud.
- The courts denied the stay, finding no substantial factual question of fraudulent inducement, and the parties proceeded to arbitration.
- After extensive hearings, arbitrators awarded Weinrott approximately $30,713.47; the award was confirmed by the trial court and the Appellate Division.
- On appeal, Carp argued the award should not be confirmed because arbitrators rejected an offer of newly discovered evidence supporting fraudulent inducement.

## Issues

1. Under a contract containing a broad arbitration clause, whether claims of fraud in the inducement of the contract are to be decided by arbitrators rather than courts.
2. Whether the award should be vacated or confirmation denied based on the arbitrators’ rejection of alleged newly discovered evidence of fraudulent inducement.

## Decision

- The Court of Appeals affirmed the order confirming the arbitration award.
- The court held that, going forward, fraud in the inducement of a contract containing a broad arbitration clause is generally an issue for arbitrators, disapproving the prior approach that treated such fraud as a court question.
- The court found no basis under New York’s statutory vacatur standards to disturb the award based on the arbitrators’ handling of the proffered additional fraud evidence.

## Legal Principles

- When parties agree to a broad arbitration clause, claims that the contract as a whole was fraudulently induced are generally arbitrable and should be decided by the arbitrators.
- A court may intervene where the challenge is directed specifically to the making or validity of the arbitration agreement itself, rather than to the overall contract.
- Courts will not vacate an award based on an arbitrator’s evidentiary rulings or asserted errors on the merits absent a statutory ground for vacatur (e.g., corruption, fraud in the arbitration, or other qualifying misconduct).

## Conclusion

The Court of Appeals affirmed confirmation of the arbitration award and shifted New York law toward submitting fraud-in-the-inducement claims to arbitration when the parties’ clause is broad, reserving judicial determination for challenges aimed specifically at the arbitration agreement or other statutory grounds for vacatur.


Matter of Weinrott (Carp), 32 N.Y.2d 190 (N.Y. 1973)