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IT IS THE ROLE OF THE COURT, NOT THE ARBITRATOR, TO DETERMINE WHETHER A NON-SIGNATORY IS BOUND BY AN ARBITRATION AGREEMENT (FIRST DEPT).

The First Department, reversing Supreme Court, determined it is the role of the court, not the arbitrator, to rule on whether a non-signatory is bound by an arbitration agreement:

The issue of whether a party is bound by an arbitration provision in an agreement it did not execute is a threshold issue for the court, not the arbitrator, to decide … . The case is remanded to the IAS court for an evidentiary hearing and further factual development on whether the non-signatory petitioners were bound to the arbitration clause … .

The cases respondent relies upon in opposition do not change the result. Respondent’s cases do not involve situations where there was a dispute as to whether the party sought to be bound to arbitrate had signed the agreement containing the arbitration clause … .

While respondent makes extensive arguments as to why the non-signatory petitioners were effectively parties to the agreement and thus bound by the arbitration clause, these arguments are not relevant. The IAS court did not come to a definitive ruling as to whether the non-signatory petitioners were bound by the arbitration agreement, and instead denied the petition without prejudice so that it could be decided by the arbitrator. Absent a ruling on the issue, the only question to be addressed by this Court is whether the IAS court properly declined to do so. Matter of 215-219 W. 28th St. Mazal Owner LLC v Citiscape Bldrs. Group Inc., 2019 NY Slip Op 08281, First Dept 11-14-19

 

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