Commercial Division Blog

Posted: August 11, 2016 / Categories Contracts, Arbitation, Mediation and Other ADR

Non-Signatory Directly Benefiting from Agreement Bound by its Arbitration Provision

On August 11, 2016, the First Department issued a decision in BGC Notes, LLC v. Gordon, 2016 NY Slip Op. 05775, holding that a non-signatory was bound by an agreement's arbitration provision, explaining:

The motion court correctly ordered BGC Notes to arbitrate its claims against Gordon in accordance with the terms of Gordon's employment agreement with BGC Financial. Although BGC Notes was not a signatory to the employment agreement, which is the document actually containing the arbitration provision, BGC Notes nonetheless received a direct benefit directly traceable to the employment agreement. Specifically, section 3(d) of the employment agreement provides that BGC Financial would "cause" BGC Notes to make a loan to Gordon by way of the very note that BGC Notes sues upon in this action, and BGC Notes received all the benefits that an entity ordinarily receives upon the giving of a loan. Thus, BGC Notes derived benefits from the employment agreement, and BGC Notes' contention that section 3(d) conferred a benefit only to Gordon, and at most an "indirect" benefit to BGC Notes itself, belies the terms of the employment agreement.

(Internal quotations and citations omitted).