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Posted: November 6, 2016

Dispute Covered by Arbitration Agreement Subject to Arbitration Regardless of Relief Sought

On October 26, 2016, the Second Department issued a decision in Sutphin Retail One, LLC v. Sutphin Airtrain Realty, LLC, 2016 NY Slip Op. 07018, holding that a dispute covered by an arbitration agreement was subject to arbitration regardless of the relief sought, explaining:

Here, the arbitration clause in the operating agreement was sufficiently broad to include the dispute at issue in this case, as it specifically provided that any controversy or dispute arising out of or relating to this Agreement shall be arbitrated. The instant dispute involves the plaintiff’s enforcement of a buyout provision of the operating agreement. Although the plaintiff argues that the operating agreement does not grant the arbitrator the authority to award specific performance, it would be premature to conclude that the arbitrator would exceed the scope of his or her powers and make an award that exceeded the authority delineated under the operating agreement. Arbitrators are in the final analysis empowered to do justice and the award may well reflect the spirit rather than the letter of the agreement. Therefore, the appropriate inquiry is whether the dispute is governed by the arbitration agreement and not whether the arbitrator has the authority to award the specific relief sought by the plaintiff in the complaint. As the dispute involves the application of a provision of the operating agreement, the matter is subject to arbitration regardless of whether the arbitrator has the power to award specific performance, which was sought by the plaintiff in its complaint. Accordingly, the Supreme Court should have granted the defendants’ motion to compel arbitration and stay all proceedings in the action pending arbitration.

(Internal quotations and citations omitted) (emphasis added).

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