Arbitration Proceeding Held on Sunday Invalidates Arbitration Award

A dispute involving the distribution of an estate was submitted to arbitration. The parties proceeded to court where one party sought to have the arbitration decision confirmed, while the other requested that it be vacated.

One of the grounds for vacatur was the claim that one of the arbitration hearings took place on a Sunday, something prohibited under Judiciary Law §5. While that law addresses court business, the court in this case extended that rule to arbitration, because “arbitrators perform a judicial function.” With that, the court refused to enforce the arbitration proceeding.

The court also found that the arbitrators exceeded their authority on a number of grounds. One of those grounds dealt with the arbitrators’ direction to transfer a property free and clear of liens or mortgages. Because the party holding the lien or mortgage was not party to the arbitration, such directive could not be enforced.

This type of overbroad decision is found from time to time and parties to any arbitration or related court proceeding are well advised to make sure that a decision only addresses topics included in the parties’ arbitration agreement. In addition to lien-free property transfers, arbitrators sometimes provide for an award of costs or attorneys’ fees. Unless that is agreed to in the arbitration agreement, that provision should not be enforced by a court.

Bauer v. Bauer (Supreme Court, Kings County)