Parties to transaction agreements-whether they be international, cross-border or domestic-often include provisions concerning choice of law and choice of forum. Since New York is a major commercial center in the world, the choice of New York law and a New York forum is commonplace. Effective June 2, 2014, New York now offers parties to agreements the ability to opt for in-court accelerated adjudication, which provides the same benefit of expediency as private arbitration, but at the same time offers the benefits of limited pre-trial discovery, pre-trial motions and a meaningful end of case appeal that private arbitration does not offer.

The Commercial Division of New York Supreme Court

In 1995, New York launched the first commercial court of its kind in the country. The Commercial Division of the Supreme Court of the State of New York, the court of general jurisdiction in New York, hears cases between commercial parties where the amount in controversy meets a certain threshold amount, for example, US$500,000 in New York County. There are 28 Commercial Division justices throughout New York State, and the Commercial Division spans ten different jurisdictions: Albany, Kings, Nassau, New York, Onondaga, Queens, Suffolk and Westchester Counties, as well as two judicial districts in upstate New York. The Commercial Division justices typically have greater expertise than their counterparts in non-commercial parts in the complex issues that arise in commercial cases.

In March 2013, New York Chief Judge Jonathan Lippman appointed a Commercial Division Advisory Council to advise him on an ongoing basis about matters relating to the Commercial Division. The Council is charged with, among other things, keeping the Chief Judge apprised of developments in the business world that may affect the court system, working to help the Commercial Division better understand and respond to the needs of the business community, and recommending rules of practice in the Commercial Division. Since its formation, the Council has recommended numerous Commercial Division rules that have been adopted. One of those rules is Rule 9, which relates to accelerated adjudication.

New Rule 9

The new Rule 91 permits parties in any commercial case (with the exception of class actions) to select the expedited procedures and limited discovery of an accelerated adjudication. Most importantly, these procedures can be chosen in a pre-dispute context, and included in a transaction agreement. Indeed, Rule 9 provides language to include in an agreement if the parties wish to have accelerated adjudication in the event a dispute later arises: "Subject to the requirements for a case to be heard in the Commercial Division,2 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."

Under Rule 9, a case must be trial ready with nine months after the filing of a so-called Request for Judicial Intervention (which may be filed by either party early in the case). Accelerated adjudication proceedings will take place before a New York Supreme Court justice, and any final decisions are subject to each party's full right to appeal.  Parties to the accelerated adjudication proceedings waive a number of rights. Trial by jury and interlocutory appeals3 are unavailable in an accelerated proceeding, and parties who pursue the process agree not to request punitive damages, contest personal jurisdiction, or seek dismissal under the doctrine forum non conveniens.

In addition to avoiding costly delays, litigants in an adjudicated proceeding also will be spared the burden and expense of full-blown discovery available in standard commercial actions. Indeed, new Rule 9 limits both parties' ability to burden the other, with each party granted only seven interrogatories, seven depositions, and five requests to admit. Document requests are limited to only those documents that are actually relevant to a claim or defense, and must be strictly limited in time frame, subject matter, and the persons to whom the requests pertain. As for e-discovery, any documents produced electronically must be provided in a searchable format that is usable by the other party.  And where the costs and burdens of e-discovery are disproportionate to the nature of the dispute, the amount in controversy, or the relevance of the documents, the court may either deny the request outright or require the requesting party to advance the reasonable costs of production (subject to allocation in the final judgment). Of course, parties are free to agree to any additional or modified discovery that they may wish, but the safeguards of Rule 9 will be there to help shield unwilling litigants from the burdens of discovery.

Advantages of Accelerated Adjudication over Private Arbitration

There are several advantages of accelerated adjudication in the Commercial Division over private arbitration. First, the cost of accelerated adjudication is far less than arbitration. In the Commercial Division, the parties obtain access to the court for only the cost of a modest filing fee. In private arbitration, by contrast, the parties often pay the hourly rates of the arbitrator or arbitration panel, which can be quite substantial. Second, although there are many qualified arbitrators available in private mediation, in accelerated adjudication the parties have assigned to them a seasoned jurist with substantial experience in business litigation. The third advantage is the availability of obtaining a pre-trial dismissal in an accelerated adjudication proceeding. Generally speaking, in private arbitration it is quite rare to obtain a dismissal of claims before hearings are held. In court, however, motions to dismiss and motions for summary judgment are permitted, and if well grounded, will be granted. Finally, one of the most significant benefits of new Rule 9 concerns the right to appeal. In the arbitration context, a final award is extremely difficult to overturn, however wrongheaded. The grounds for overturning an arbitrator's award are very narrow, such as making a showing of partiality or that the arbitrator manifestly disregarded the law. As the U.S. Supreme Court has noted, the fact that an arbitrator committed a "grave error" is not enough; "[t]he potential for … mistakes is the price of agreeing to arbitration."4 After an accelerated adjudication proceeding, by contrast, the parties have a right to appeal to the Appellate Division, and can raise any meritorious issues on appeal.

Conclusion

New Commercial Division Rule 9 provides contractual parties choosing a New York forum an attractive alternative to typical court proceedings or private arbitration. Any party to a contract that is deciding upon a dispute resolution forum should consider the use of the accelerated adjudication proceedings available in the New York Commercial Division.