In an effort to expedite the litigation process, reduce court costs and to offer contracting parties an alternative to arbitration, the New York State Supreme Court Commercial Division has adopted an “accelerated adjudication” rule, effective as of June 2, 2014, for all disputes exceeding $500,000.

The “accelerated adjudication” rule, also known as Rule 9 of the Rules for Practice for the Commercial Division (22 NYCRR §202.70), accelerates all pre-trial proceedings to be completed within nine (9) months from the date of the filing of a Request for Judicial Intervention (RJI), by providing the following:

Waiver of Certain Rights. The parties are deemed to irrevocably waive:

  1. Objections based on lack of personal jurisdiction or forum non-conveniens
  2. Trial by jury
  3. Punitive and exemplary damages
  4. Interlocutory appeals

Limited Discovery. Unless otherwise agreed to by the parties, discovery is limited to:

  1. No more than 7 interrogatories and 5 requests to admit per party
  2. No more than 7 depositions per party, each deposition not to exceed 7 hours
  3. Document discovery limited to those “relevant to a claim or defense in the action” and “restricted in terms of time frame, subject matter and persons or entities”
  4. Certain e-discovery limitations, including where the court may require the requesting party to advance costs “where the costs and burdens of e-discovery are disproportionate to the nature of the dispute of the amount in controversy”

Rule 9 provides the following specific language (which can be amended or changed by the parties) to be used by the parties in any contract to consent to accelerated adjudication:

“Subject to the requirements for a case to be heard in the Commercial Division, the parties agree to submit to the exclusive jurisdiction of the Commercial Division, New York State Supreme Court, and to the application of the Court's accelerated procedures, in connection with any dispute, claim or controversy arising out of or relating to this agreement, or the breach, termination, enforcement or validity thereof.”  

Parties in real estate transactions should understand potential advantages and disadvantages of including “accelerated adjudication” in real estate documents. While such option may prove to be an attractive alternative to extended litigation and arbitration in certain real estate contracts such as purchase agreements, joint venture agreements and leases, parties will need to consider:

  • the time and costs that “accelerated adjudication” will still require
  • whether the waiver of certain rights are in such party’s best interest for such transaction 
  • whether this new and untested rule will prove to be effective

In a loan transaction, lenders will likely favor this provision in their loan documents to minimize delay tactics by defaulting borrowers and guarantors, while borrowers and guarantors should carefully review any such accelerated adjudication provisions to make sure they are not unknowingly waiving certain rights with respect to the collateral.