Abhishek Srivastava leased a 2024 BMW iX xDrive50 in July 2023. According to the appellate record, the SUV had recurring charging failures, wouldn’t reliably start, and threw a fire-hazard warning that repeated visits to BMW-authorized repair shops never resolved. Srivastava sued under California’s Song-Beverly Consumer Warranty Act — the state’s lemon law, which requires manufacturers to replace or refund a vehicle that can’t be fixed after a reasonable number of repair attempts, per the California DMV’s own summary of the law. BMW never signed the sales contract at issue, and it wasn’t the party that leased Srivastava the car. But on August 4, 2026, California’s Sixth District Court of Appeal ruled that BMW could still force the case into private arbitration, reversing a trial court that had said otherwise, according to the published opinion in Srivastava v. BMW of North America. It’s a plain lesson in how an arbitration clause in a contract you signed can bind you to a company you never dealt with directly.
How BMW Got Into a Contract It Didn’t Sign
The lease Srivastava signed was between him and the dealership’s financing arm, not BMW of North America directly. But the arbitration clause inside that lease was written broadly: it let “either you or we” demand binding arbitration over “any current or future claim or controversy… arising out of or related to… the condition of the Vehicle [or] the Vehicle’s warranty(ies),” and it defined “we” to include BMW by name, according to the court’s opinion. That detail decided the case. Under a legal test the California Supreme Court laid out in Goonewardene v. ADP, a company that never signed a contract can still enforce an arbitration clause inside it if the contract shows the signing parties intended to benefit that company. Because Srivastava’s lease named BMW directly and specifically covered warranty disputes, the appeals court found BMW qualified as an intended third-party beneficiary with standing to compel arbitration, even though BMW’s warranty obligations come from state statute rather than from the lease itself.
Why the Trial Court Got Reversed
The trial court had denied BMW’s motion to compel arbitration, reasoning that Srivastava’s warranty claims arose from California statute rather than from any promise inside the lease, so BMW couldn’t ride the lease’s arbitration clause into a dispute it wasn’t a party to. The appellate court disagreed, distinguishing an earlier case called Ford Motor Warranty Cases, where the lease at issue never named the manufacturer or mentioned arbitrating warranty claims at all. Because Srivastava’s lease did both, the panel ruled the two situations weren’t comparable, and reversed.
This Isn’t California’s Official Lemon Law Arbitration
It’s worth being precise about what kind of arbitration this is, because California actually runs two very different systems. The state’s Arbitration Certification Program, overseen by the Department of Consumer Affairs, certifies manufacturer-funded arbitration programs specifically for lemon law claims — a process built to move fast, with decisions typically arriving within 40 days and manufacturers required to comply within 30, according to the DCA’s own program page. The arbitration clause at the center of the BMW case is nothing like that. It’s a private contract term, drafted by the dealership’s finance company and enforceable under the federal Arbitration Act, that routes disputes away from public court and into binding arbitration chosen by the companies involved, with no state certification or oversight built in.
What to Check in Your Own Lease or Loan
The case matters beyond BMW owners because nearly every modern vehicle lease and finance contract contains some version of this clause, and the details vary more than most buyers realize. Three things are worth checking on paper you’ve already signed: whether the arbitration clause names the manufacturer specifically, not just the dealer or lender; whether it explicitly covers warranty or “condition of the vehicle” disputes rather than just financing disputes; and whether it includes a “delegation clause” that hands even the question of whether arbitration applies over to the arbitrator instead of a judge. That last point matters here, too — the appellate court sent the case back to the trial court specifically to decide whether the delegation clause in Srivastava’s lease is unconscionable, and it explicitly took no position on that question itself. That fight isn’t over. It just moved back downstairs.
None of this means arbitration clauses are unbeatable, or that every warranty dispute over a defective lease gets steered away from court. It means the specific wording matters enormously, and that a clause naming the manufacturer by name and covering the exact category of your complaint can pull a company into arbitration that never signed anything with you personally. If you’re weighing whether to fight a defective-vehicle claim in court, the first document worth rereading isn’t the warranty booklet. It’s the arbitration paragraph in the lease or loan contract you signed on delivery day.