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April 19, 2022

Corruption, fraud, or misconduct in procuring an arbitration award

Supreme Court denied a petition to confirm an arbitration award under color of CPLR §7511.  

§7511 of the CPLR provides, in pertinent part, that an "arbitration award shall be vacated if the court finds that the rights of the complaining party were prejudiced by corruption, fraud, or misconduct in procuring the award." Noting that "[a] party seeking to overturn an arbitration award bears a heavy burden and must establish a ground for vacatur by clear and convincing evidence," the Appellate Division affirmed the Supreme Court's decision.

Citing Goldfinger v Lisker, 68 NY2d at 232-233, the Appellate Division explained that there was "clear and convincing evidence" that the arbitrator committed misconduct and that such misconduct "prejudiced the [Responent's] rights or the integrity of the arbitration process."

Respondents had submitted an affirmation executed by the arbitrator in which the arbitrator "averred that almost a year after the end of the arbitration proceeding, he received information from the [Petitioner] and 'others speaking for' the [Petitioner]  concerning the work that was the subject of the arbitration," and "[b]ased on this information," the arbitrator decided to render the award at issue "without first providing the [R]espondents an opportunity to respond to the information."

In the words of the Appellate Division, "The arbitrator's admitted consideration of evidence received from one party, without providing the other party the opportunity to respond, along with evidence in the record of ex parte communications, established by clear and convincing evidence that the arbitrator committed prejudicial misconduct."

Click HEREto access the Appellate Division's decision posted on the Internet.

 

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