New York’s Intermediate Appellate Court, Vacating Earlier Ruling

New York’s Intermediate Appellate Court, Vacating Earlier Ruling

Reaffirms that It Is the Court, Not the Arbitrator, Who Decides Threshold Issue of Arbitrability

By Louis M. Solomon

We earlier blogged on the Appellate Divisions decision in Jalas v. Halperin.  The Appellate Division subsequently granted a motion to reargue that decision, vacated the earlier decision, and rendered a new one, Jalas v. Halperin, 2009-00362, 2009-111726 (2d Dep't June 2011). In the revised decision, the Appellate Division reaffirms the important international litigation ruling from the initial decision.  The trial court had assumed that a valid written agreement to arbitrate was made on behalf of the decedent and thus had "declined to address the Administrator's contention that the decedent was never a party to the arbitration agreement".  This was error, found the Appellate Division: 

"The issue of whether there is a clear, unequivocal, and extant agreement to arbitrate is for the court and not the arbitrator to determine (see Matter of Primex Intl. Corp. v Wal-Mart Stores, 89 NY2d 594 , 598 [enhanced version available to lexis.com subscribers] ;Matter of County of Rockland [Primiano Constr. Co.], 51 NY2d 1, 6-8 [enhanced version ]; Matter of Perciballi Assoc., LP v Corporate Natl. Realty, LLC, 74 AD3d 976 [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law]; Matter of O'Donnell v Arrow Elecs., 294 AD2d 581) [enhanced version ]. Accordingly, in the first instance, the Supreme Court should have addressed the parties' contentions regarding the existence of a valid agreement to arbitrate".

In the instance, helf the Appellate Division, "the Supreme Court [i.e., the trial court] should have addressed te parties' contentions regarding the existence of a valid agreement to arbitrate.

Rather than remanding, however, the Appellate Division decided the matter itself "in the interest of judicial economy".  The Appellate Division repeated the "clear, explicit and unequivocal" agreement language in holding that in the case before it there was no such agreement and hence no basis to hold the nonsignatory to the arbitration clause.  That one party signed "as agent" for another did not supply the missing evidence, as the Court found that in fact there was no agency (it appears that the Appellate Division made that finding).

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