Second Circuit Holds That Dispute About Arbitral Fees Is a Matter for Arbitrator

The Second Circuit Court of Appeals has concluded that a dispute about what fees each party to an ongoing arbitration is required to pay is a matter for the arbitrator, not a court, to determine.

Twitter Inc., now known as X Corp., fired several of its employees. Those employees initiated arbitration with JAMS pursuant to dispute resolution agreements (DRAs) they signed agreeing to arbitrate any employment disputes they had with Twitter. A dispute developed regarding the payment of arbitral fees. Twitter argued that the fees should be allocated between the parties. JAMS and the employees believed Twitter was required to pay all fees except for the case initiation fees. Twitter refused to pay and JAMS therefore refused to appoint an arbitrator. The employees asked the Southern District of New York to conclude that Twitter was failing, neglecting, or refusing to arbitrate by refusing to pay the fees. The district court ordered Twitter to pay the fees.

The Second Circuit vacated and remanded. It concluded that “whether a party has failed to pay arbitration fees in an ongoing arbitral proceeding is a procedural issue entrusted to the arbitrator or arbitral body — not the court.” Put differently, “once the parties are before their chosen arbitral body, refusal to pay ongoing fees alone is not a ‘failure, neglect, or refusal ... to arbitrate’ that a district court is empowered to remedy.” The Second Circuit explained that district courts are not authorized to resolve procedural issues internal to arbitration and that questions about whether a party has paid required fees is such a procedural issue.

Frazier v. X Corp., No. 24-1948 (2d Cir. Sept. 2, 2025).