On December 4, 2020, the Administrative Board of the Courts sought public comment on the Commercial Division Advisory Council’s (“CDAC”) proposed amendment to Commercial Division Rule 3(a), 22 NYCRR § 202.70(g). The current language of Rule 3 permits the court to direct, or for counsel to seek, the appointment of an uncompensated mediator for the purpose of mediating a resolution of all or some issues presented in the litigation The CDAC’s Rule 3(a) proposal would “permit the use of neutral evaluation as an [alternative dispute resolution (“ADR”)] mechanism and to allow for the inclusion of neutral evaluators in rosters of court-approved neutrals.” Currently, under Part 146 of the Rules of the Chief Administrative Judge, “neutral evaluation” is “a confidential, non-binding process in which a neutral third party (the neutral evaluator) with expertise in the subject matter relating to the dispute provides an assessment of likely court outcomes of a case or an issue in an effort to help parties reach a settlement.” The Chief Administrative Judge’s rules already set forth the training prerequisites to become a neutral evaluator.
Commercial Division Rules that Arbitration Awardee Lacked Standing to Enforce Award Based on Collection Procedures Agreed to in the Underlying Contract
Arbitration is a creature of contract and, as such, enforcing an arbitral award requires strict adherence to the procedures set forth in the relevant agreements. This is true even where those procedures might preclude a party to the arbitration from taking steps to enforce its own award. In Zachariou v. Manios, Justice Andrea Masley of the Commercial Division dismissed an awardee’s enforcement action for lack of standing on the ground that the relevant arbitration agreement conferred exclusive authority over collecting and enforcing party distributions to a third-party trustee—and not to the plaintiff.
New York’s International Arbitration Center Hosts Welcome Reception for Commercial Division’s New International Arbitration Justice
On June 11, 2019, the New York International Arbitration Center (“NYIAC”) and members of New York’s international arbitration bar held a reception to welcome Justice Saliann Scarpulla of the New York County Commercial Division. Earlier this year, Justice Scarpulla assumed responsibility for the Commercial Division’s specialized international arbitration part and, in that role, will hear all international arbitration matters coming before the Court.
On Wednesday June 5, 2019, all eight of the New York County Commercial Division justices participated on a panel for the New York State Bar Association’s Commercial and Federal Litigation Section on “Motion Practice Before the Commercial Division.” Motion practice is one of the most frequently used aspects of practice in the Commercial Division. The format was an informal question and answer session on motion practice, moderated by the Section’s Past Chair, Robert Holtzman.
Beginning in April 2019, the First Department has changed its practice to assign panels of four justices for oral argument, as opposed to five justices as has been the traditional practice of the court. This change is the result of three ongoing vacancies on the First Department that have remained unfilled by Governor Cuomo. The Presiding Justice of the First Department, Hon. Rolando Acosta, explained that the move to four justice panels is necessary because there are not enough judges to hear all the pending appeals. Aware that four justice panels could create a two-to-two split, Presiding Justice Acosta explained that a fifth judge can be brought in to issue a decision if needed. Parties can preserve their right to reargue or submit the case to a fifth justice by making a statement on the oral argument record. This change will likely remain in place until new judges are appointed to the court.
Following Justice Charles Ramos’s retirement from the Commercial Division at the end of last year, commercial practitioners have awaited an announcement reallocating responsibility for the Division’s international arbitration matters. Since 2013, all international arbitration cases filed in the Commercial Division—including those arising under CPLR Article 75 and the Federal Arbitration Act, 9 U.S.C. § 1 et seq.—had been assigned to Justice Ramos as part of an effort to establish a dedicated part specializing in the international arbitration field.
Non-Party to Arbitration Agreement Successfully Petitions the Commercial Division to Avoid Being Compelled to Join Arbitration
Arbitration is a matter of contract and, as such, non-parties generally cannot be compelled to arbitrate under agreements that they have not signed or agreed to. In IQVIA RDS Inc. v. Eisai Co. Ltd., the Commercial Division recently highlighted two exceptions to this general rule. Although the Court ultimately found neither exception to be applicable, the case raises important issues that merit attention.
Commercial Division Holds that Failure to Request Rationale for Arbitration Award Makes It Virtually Unreviewable on Manifest Disregard Ground
Parties to arbitration proceedings at times decide to forego a written decision by the arbitration panel explaining the basis for their arbitration award. While doing so may reduce the costs of arbitration and can provide other strategic advantages, it also makes it more likely that the Commercial Division will find the award unreviewable. This point is exemplified by the recent decision by Justice Charles E. Ramos of the Commercial Division in NSB Advisors, LLC v. C.L. King & Associates, Inc.
On October 11, 2017, Chief Administrative Judge Lawrence Marks amended Rules 10 and 11 of Section 202.70(g) (“Rules of Practice for the Commercial Division”) with respect to Alternative Dispute Resolution (“ADR”).