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THE ARBITRATION AGREEMENT CALLED FOR NOTIFICATION OF AN ARBITRATION BY CERTIFIED MAIL; ALTHOUGH THE APPELLANT APPARENTLY NEVER PICKED UP THE MAILED NOTICE AND DID NOT APPEAR AT THE ARBITRATION, HER DUE PROCESS RIGHTS WERE NOT VIOLATED; THE PARTIES’ AGREEMENT ON THE METHOD OF SERVICE CONTROLS (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Miller, determined the appellant, a registered broker with the Financial Industry Regulatory Authority (FINRA), was bound by the notice requirements in the arbitration agreement. The agreement called for notification of an arbitration by certified mail. The appellant did not appear and her former client was awarded over $3 million. The appellant sought to vacate the award arguing that notification by mail deprived her of due process because she was often away from her residence and the client was aware she could be contacted by email. The certified mail notification was never picked up by the appellant:

… [I]n the context of binding arbitration, it is the parties’ consent which vests the authority in the arbitrator to decide a particular dispute. Accordingly, although the CPLR provides that a demand for arbitration, or a notice of intention to arbitrate, must be served “in the same manner as a summons or by registered or certified mail, return receipt requested” (CPLR 7503[c]), New York courts have long recognized that “parties to an arbitration agreement may prescribe a method of service different from that set forth in the CPLR” … . Indeed, “the parties may agree to other methods for service, either by stipulating the manner in the arbitration clause or, more generally, by adopting the arbitration rules of an arbitration agency” … . “Where . . . parties agree to the manner in which a demand for arbitration can be served, they do not have to comply with the service requirements established by CPLR 7503(c)” … . * * *

Where parties to an arbitration agreement have consented to an alternative method of service, “[t]he method of service by which parties have agreed to be bound must be complied with according to the exact terms thereof in order that the requirements of due process be satisfied” … . Matter of New Brunswick Theol. Seminary v Van Dyke, 2020 NY Slip Op 03114, Second Dept 6-3-20

 

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