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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: April 20, 2015

Arbitrator Disqualified for Failing to Follow Court’s Direction

On April 16, 2015, the First Department issued a decision in Matter of Grynberg v. BP Exploration Operating Co. Ltd., 2015 NY Slip Op. 03268, affirming a trial court’s disqualification of an arbitrator.

In Matter of Grynberg, the First Department on a prior appeal

vacated the portion of [the arbitrator’s] award as to the claims between petitioners and respondent BP Exploration Operating Company Limited (BPX) on the issue of signature payment bonuses, and remanded the matter to [the arbitrator] to consider and determine the nature of the payment made by BPX, stating, Contrary to the arbitrator’s finding, deducting a payment intended to be a bribe to a public official is unenforceable as violative of public policy. Upon remand, [the arbitrator], despite indicating that he understood the order, refused to determine the nature of the signature bonus payments. Instead, he asserted his disagreement with this Court’s legal conclusion and even with its authority. The arbitrator’s explicit failure to follow the clear directive of this Court warrants vacatur of the new award and remand to a new arbitrator.

(Internal quotations and citations omitted). This decision illustrates that while courts are very deferential to arbitral interpretation of the law in general, they have no patience for arbitrators ignoring their orders.

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