Arbitration and personal jurisdictionMarch 21, 2013

American Ind. Ins. Co. v Art of Healing Medicine, P.C., 2013 NY Slip Op 01546 (1st Dept. 2013)

“At this pre-arbitration stage, the issue is not whether New York courts have jurisdiction over AIIC, but whether the arbitrator has authority under the terms of the insurance contract to award no-fault benefits to the appellants (see American Ind. Ins. v Gerard Ave. Med. P.C., 12 Misc 3d 1176[A], 2005 NY Slip Op 52302[U] [Sup Ct, Bronx County]). Without providing a copy of the policy of insurance, AIIC could not establish that a valid arbitration agreement is not controlling. Our recognition in other cases that New York State courts do not have personal jurisdiction over AIIC does not entitle AIIC to, in effect, a declaration that the arbitrator does not have authority and jurisdiction over AIIC. While personal jurisdiction is required for the exercise of the state’s judicial power over a party, arbitration is a form of dispute resolution almost wholly independent of the court system (see Siegel, NY Prac § 586 at 1050 [5th ed 2011]). “Except for a few basic guarantees, such as the right to be heard and to be represented by counsel at the arbitration, the procedural law of the state is also inapplicable to arbitration, including the rules of evidence” (id. at 1052). In short, personal jurisdiction is not required for arbitration that is controlled by the parties’ agreement. Therefore, the Supreme Court erred in granting the petition to permanently stay arbitration on the ground that there was no personal jurisdiction over AIIC.”

So personal jurisdiction is not a pre-requisite to filing an arbitration against somebody in the State of New York?  I suppose the execution of an arbitration agreement, whether voluntarily or through operation of law, will waive jurisdictional defenses, similar to a forum selection clause in a contract – hence all cruise ship cases must be heard in Miami-Dade Circuit Court in the Sunshine State.  I am taking it that if the policy did not contain an arbitration clause and there were no other links to New York, then a successful personal jurisdictional defense could have been forwarded?

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