Arbitrators to Decide Whether Arbitration Agreement Survived the Termination of The Parties’ Substantive Agreement

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Posted on: Dec 3 2025

In Badme v. AECOM, 2025 N.Y. Slip Op. 06640, (1st Dept. Dec. 02, 2025), plaintiff sued for age discrimination after termination, arguing the arbitration clause in his employment contract expired when the contract ended. The motion court held that the arbitration agreement remained enforceable, citing the contract’s broad arbitration clause and survival clause. The Appellate Division, First Department, affirmed, emphasizing that the contract’s broad arbitration provision required the parties to arbitrate the dispute, though it held that it was up to the arbitrator —not the motion court—to resolve whether the expiration of the employment term within the contract affected the enforceability of the arbitration provision.[1]

Plaintiff was employed by defendant, a publicly traded, multinational infrastructure consulting firm that conducts business nationwide. Plaintiff alleged that he was demoted and subsequently fired by defendant because of his age. Plaintiff brought suit against defendant for age discrimination and retaliation pursuant to the New York State Human Rights Law, New York State Labor Law, and New York City Human Rights Law.

The employment agreement contained an arbitration provision in which the parties agreed that “any dispute arising out of or relating to [the] Agreement or the formation, breach, termination or validity thereof, [would] be settled by binding arbitration by a panel of three arbitrators in accordance with the employment arbitration rules of the [AAA]”. Plaintiff argued that the foregoing arbitration clause expired when the employment agreement was terminated on December 31, 2022.

Defendant moved to compel arbitration and to stay the action pending arbitration.

The motion court granted the motion.

As an initial matter, the motion court held that the parties had entered an enforceable arbitration agreement that contained a clear and unmistakable intent to delegate questions of arbitrability to the AAA.[2] Since the parties agreed that the AAA rules governed, said the motion court, “questions concerning the scope and validity of the arbitration agreement, including issues of arbitrability, [were] reserved for the arbitrators”.[3]

The motion court rejected plaintiff’s argument that the arbitration clause expired when the employment agreement was terminated on December 31, 2022, at which time plaintiff became an employee at will. The motion court held that this argument was contrary to rulings by the First Department, in which the Court directed the lower courts to “treat an agreement containing an arbitration clause as if there were two separate agreements – the substantive agreement between the parties, and the agreement to arbitration”.[4]

The motion court noted that the “survival” clause in the employment agreement manifested the parties’ intent that the arbitration provision would survive the termination of the agreement.[5] That clause provided:

The rights and obligations of the parties under the provisions of this Agreement that relate to post-termination obligations shall survive and remain binding and enforceable, notwithstanding the expiration of the term of this Agreement, the termination of Executive’s employment with the Company for any reason or any settlement of the financial rights and obligations arising from Executive’s employment hereunder, to the extent necessary to preserve the intended benefits of such provisions.

Therefore, concluded the motion court, “considering the above survival clause, and there being no clear manifestation to the contrary, the arbitration clause survived the termination of the Employment Contract.” “Because the dispute arose from the Employment Contract,” said the motion court, “the arbitration clause [was] triggered” and “Defendant’s motion to compel arbitration is granted.”

On appeal, the First Department unanimously affirmed.

The Court found the “arbitration provision in the employment agreement between plaintiff and defendant” to be “broad” “requiring ‘all disputes arising out of or relating to the agreement’ to be referred to arbitration under AAA rules.”[6] Under the AAA’s rule, noted the Court, the arbitration tribunal is “authorize[d] … to rule on its own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement.”[7] “Accordingly,” said the Court, “the issue as to whether the expiration of the employment term affects the enforceability of the arbitration provision is one of arbitrability, which is for the arbitrators to determine.”[8]

However, the Court held that “[w]hile the motion court properly recognized the effect of the broad arbitration provision and granted the motion to compel on that basis, the court should not have addressed the merits” – i.e., whether the expiration of the employment term affected the enforceability of the arbitration provision.[9]

The Court found that the “complaint assert[ed] at least some claims that [were] plainly within the scope of the employment agreement and would be subject to arbitration if the arbitrators determine[d] that the arbitration obligation was not entirely extinguished by the expiration of the employment term.”[10] Accordingly, the Court held that the motion “court properly stayed th[e] action in its entirety pending the determination by the arbitrators on the arbitrability issues.”[11]

Takeaway

Badme underscores that arbitration agreements can survive the termination of a contract, unless expressly negated. One reason is because courts treat an arbitration clause as a separate agreement from the substantive contract. As such, the enforceability of the arbitration agreement does not automatically end when the terms of the contract expire.

Badme also reinforces the principle that where parties clearly and unambiguously delegate questions of arbitrability to an arbitral form, such as the American Arbitration Association, arbitrators—not the courts—decide whether the arbitration obligation continues post-termination. As shown in Badme, broad arbitration provisions, coupled with AAA rules granting arbitrators authority over jurisdictional issues, reinforce this principle.

Additionally, as in Badme, survival clauses in contracts strongly indicate the parties’ intent for arbitration obligations to continue beyond termination.

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Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice.

[1] We examined the issue of who decides arbitrability in numerous articles, including: Who Decides Whether A Binding Agreement to Arbitrate Exists? First Department Tackles This Threshold Question; Who Decides “Gateway” Issues of Arbitrability? The Second Department Weighs In; Who Decides Arbitrability? It Depends on The Agreement; Gatekeepers of Arbitrability: Fraud, Mistake, and the Absence of Consideration; The Arbitrator, Not The Court, Decides Questions of Contract Validity; and Who Decides Arbitrability? It Depends on The Agreement – Revisited. To find additional articles related to the arbitration, visit the “Blog” tile on our website and enter the search term “arbitration” or any other related search term in the “search” box.

[2] See Anima Group, LLC v. Emerald Expositions, LLC, 191 A.D.3d 572 (1st Dept. 2021).

[3] Flintlock Const. Services, LLC v. Weiss, 122 A.D.3d 51, 54 (1st Dept. 2014).

[4] O’Neill v. Krebs Communications Corp., 16 A.D.3d 144, 144 (1st Dept. 2005) (citing Matter of Weinrott (Carp.), 32 N.Y.2d 190 (1973)).

[5] Primex Int’l Corp. v. Wal-Mart Stores, Inc., 89 N.Y.2d 594, 601-02 (1997).

[6] Slip Op. at *1.

[7] Id. (citing Life Receivables Trust v. Goshawk Syndicate 102 at Lloyd’s, 66 A.D.3d 495, 496 (1st Dept. 2009), aff’d, 14 N.Y.3d 850 (2010), cert denied, 562 US 962 (2010)).

[8] Id. (citing Life Receivables, 66 A.D.3d at 496; Schindler v. Cellco P’ship, 200 A.D.3d 505, 506 (1st Dept. 2021); Remco Maintenance, LLC v. CC Mgt. & Consulting, Inc., 85 A.D.3d 477, 480 (1st Dept. 2011)).

[9] Id. (citing L&R Exploration Venture v. Grynberg, 22 A.D.3d 221, 222 (1st Dept. 2005), lv. denied, 6 N.Y.3d 749 (2005); Fairfield Towers Condominium. Assn. v. Fishman, 1 A.D.3d 252 (1st Dept. 2003)).

[10] Id.

[11] Id. (citing County Glass & Metal Installers, Inc. v. Pavarini McGovern, LLC, 65 A.D.3d 940, 940-941 (1st Dept. 2009)).

Tagged with: Alternative Dispute, Arbitration, Arbitration Agreement, Arbitration Clause, Broad Arbitration Clause, Enforceability of Arbitration Agreement, Survival Clause