Thomas J. Hall and Judith A. Archer
With increasing regularity, parties to commercial contracts are agreeing in those contracts to arbitrate their disputes when they arise. Not surprising, however, once a dispute arises, parties often disagree about whether that dispute is subject to arbitration. We address in this column several recent Commercial Division decisions on applications to compel or stay arbitrations that illustrate the complexities sometimes involved in resolving these applications, particularly where overlapping agreements may apply, some with arbitration clauses and some without.
New York CPLR §7503
A party seeking to compel or stay arbitration can bring a special proceeding pursuant to New York CPLR. §7503. Subsection (a) thereof addresses applications to compel arbitration and entitles a “party aggrieved by the failure of another to arbitrate may apply for an order compelling arbitration.” If there is “no substantial question whether a valid agreement was made or complied with” and it is not time barred, “the court shall direct the parties to arbitrate.” If, however, there is a question about the validity of an agreement, it usually will be considered by the court. Where the alleged failure to arbitrate is in connection with an action already pending before the court, the application to compel “shall be made by motion in that action,” and will stay that action if granted.
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