In re the Arbitration between Solkav Solartechnik, Ges. M.B.H.

227 A.D.2d 94, 652 N.Y.S.2d 654, 1997 N.Y. App. Div. LEXIS 345
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJanuary 16, 1997
StatusPublished
Cited by4 cases

This text of 227 A.D.2d 94 (In re the Arbitration between Solkav Solartechnik, Ges. M.B.H.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re the Arbitration between Solkav Solartechnik, Ges. M.B.H., 227 A.D.2d 94, 652 N.Y.S.2d 654, 1997 N.Y. App. Div. LEXIS 345 (N.Y. Ct. App. 1997).

Opinion

OPINION OF THE COURT

White, J.

In 1981, petitioner, an Austrian corporation, entered into a [96]*96license and distribution agreement with respondent’s predecessor which included an arbitration clause providing as follows: "Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration in accordance with the Licensing Agreement Arbitration Rules of The American Arbitration Association”.

In July 1991, respondent filed a demand for arbitration alleging that petitioner had defaulted in royalty payments. Thereafter, the American Arbitration Association (hereinafter AAA) advised the parties that, because the Licensing Agreement Arbitration Rules (hereinafter Licensing Rules) no longer existed, the arbitration would be conducted in accordance with the AAA’s Commercial and Patent Arbitration Rules (hereinafter Commercial Rules) unless the parties indicated otherwise within 20 days. Petitioner raised no objection to the Commercial Rules; instead it claimed that there should be no arbitration because the parties’ agreement had terminated and that their dispute should be heard by a German or Austrian court. Following an exchange of correspondence between the AAA and the parties regarding the status of the arbitration, the AAA presented the parties with a list of arbitrators from which they were to select those they deemed acceptable. Petitioner indicated that several were unacceptable and repeated its objection to conducting the arbitration in New York. Despite petitioner’s protestations, the AAA appointed an arbitrator and scheduled the first hearing on January 8, 1992 in New York City.

On that date, the arbitrator failed to appear, necessitating the appointment of another. For the first time, petitioner requested that an international arbitrator be appointed and that the locale of the arbitration be changed to Germany. Both requests were denied as being untimely under the Commercial Rules. Petitioner’s attorney, who had just been retained, then requested an adjournment so that he could acquaint himself with the file. The request was granted with the next hearing being scheduled for January 23, 1992. On January 13, 1992, petitioner served a demand for document production upon respondent and, on January 16, 1992, commenced a special proceeding in Supreme Court, New York County, seeking a stay of arbitration. By cross motion, respondent sought a change of venue to Ulster County. Supreme Court (Huff, J.) granted the cross motion and issued a temporary stay of arbitration pending further order of the court. After the proceeding was transferred to Ulster County, respondent [97]*97moved for summary judgment dismissing the petition. Supreme Court (Torraca, J.) granted the motion, finding that petitioner had "sufficiently participated” in the arbitration so as to foreclose relief under CPLR 7503 (b).

When the arbitration resumed, it was discovered that the Licensing Rules did exist. This prompted a motion by petitioner to have the arbitration demand vacated, which was denied on the ground of lack of prejudice. The arbitration then proceeded, culminating in an award of $431,079.81 in respondent’s favor and an award of $84,318.74 in petitioner’s favor against a third party. Thereafter, respondent, within the context of the aforementioned special proceeding commenced by petitioner, moved to confirm the award while petitioner cross-moved to dismiss the motion on jurisdictional grounds or, in the alternative, to vacate the award. Supreme Court denied petitioner’s cross motion in its entirety and granted respondent’s motion. This appeal ensued.

Petitioner’s jurisdictional objection is predicated upon Matter of D. M. C. Constr. Corp. v Nash Steel Corp. (70 AD2d 635, appeal dismissed 49 NY2d 1040) and Matter of Probst (Midwest Mut. Ins. Co.) (39 AD2d 914, affd 32 NY2d 634). These cases stand for the proposition that prior special proceedings to compel arbitration are no longer pending after a judgment is entered directing arbitration and the arbitration has been held (see, Matter of D. M. C. Constr. Corp. v Nash Steel Corp., supra, at 636). As this case is exactly on point, petitioner maintains that respondent’s motion to confirm lacked a jurisdictional base and should have been dismissed (see, Matter of Village of Greenwood Lake v Mountain Lake Estates, 189 AD2d 987, lv dismissed 81 NY2d 1006).

Petitioner’s precedents have encountered criticism. According to the dissent in Matter of D. M. C. Constr. Corp. v Nash Steel Corp., the majority "disregarded] * * * the common sense meaning of the last sentence of CPLR 7502 (subd [a])” the purpose of which is to assure that all matters relating to an arbitration are adjudicated before the same court

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Bluebook (online)
227 A.D.2d 94, 652 N.Y.S.2d 654, 1997 N.Y. App. Div. LEXIS 345, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-arbitration-between-solkav-solartechnik-ges-mbh-nyappdiv-1997.