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Current Developments in the Commercial Divisions of the
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Posted: July 22, 2015

Whether an Arbitration is a Collateral Attack on an Earlier Award is Decision for the Court

On June 25, 2015, the First Department issued a decision in Oppenheimer & Co. Inc. v. Pitch, 2015 NY Slip Op. 05589, holding that whether an arbitration is a collateral attack on an earlier award is decision for the court, not the arbitrators.

In Oppenheimer & Co., the plaintiff sought “a declaration that a pending arbitration, involving plaintiff’s alleged failure to disclose to defendants certain documents during a prior arbitration, constitutes an unlawful collateral attack on the arbitration award in the first arbitration.” The trial court compelled arbitration so that the arbitrator could determine this issue. The First Department reversed, explaining:

Even if the client agreement compelling arbitration of all controversies between the parties demonstrates a clear intent to leave questions of arbitrability to the arbitrators, the question of whether a second arbitration proceeding is an impermissible collateral attack of an arbitration award in the first arbitration proceeding is not a question of arbitrability, but is a legal question to be determined by the court. Accordingly, the motion court erred in granting the motion to compel arbitration without determining whether defendants’ arbitration claim for sanctions based on plaintiff’s alleged misconduct is an unlawful collateral attack on the award in the first arbitration. We find that is, and that defendants must obtain an order vacating the award before their claim can be raised in arbitration (see CPLR 7511).

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

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