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“Common Law Arbitration” Explained/”Common Law Arbitration” Waived by Seeking Relief in a Counterclaim

The Second Department explained “common law arbitration,” i.e., an oral agreement to arbitrate, and determined defendant had waived the agreement to arbitrate by raising a counterclaim which related to the subject of the agreement to arbitrate:

Although there was no written agreement to arbitrate in this case, where one party demands arbitration, and the other party accepts the demand, an oral agreement to arbitrate may be formed … . Oral agreements to arbitrate are not covered by CPLR article 75, and are referred to as “common-law arbitration” agreements… . * * *However, the defendants, by their conduct in this lawsuit, waived arbitration. As this Court explained in Reynolds & Reynolds Co., Automotive Sys. Div. v Goldsmith Motor Corp. (251 AD2d 312, 313),”[t]here is no inflexible or mechanical rule as to what constitutes a waiver of the right to arbitrate. Rather, determination of the issue depends on the facts and circumstances of each particular case . . . Among the factors to be considered are the extent of the party’s participation in litigation and conduct inconsistent with the assertion of a right to arbitrate, the delay in seeking arbitration, and whether the other party has been prejudiced”… . Willer v Kleinman, 2014 NY Slip Op 01164, 2nd Dept 2-19-14

 

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