New York’s Neutral and Sophisticated Courts

Sophisticated Commercial Courts

Since New York is a major commercial and financial center and because so many parties, whether based in New York themselves or not, choose New York law to govern commercial transactions, New York law has become extraordinarily well-developed in the commercial arena. New York courts routinely decide disputes arising out of complex international commercial transactions and often review and apply foreign law. One of the policies underlying the promulgation and interpretation of New York commercial laws is predictability in business transactions. Courts in other jurisdictions in the United States look to New York precedent for assistance in deciding cases involving commercial transactions. As New York is a common law jurisdiction, courts make binding decisions in areas in which there is no governing statute, enabling the law to develop quickly in response to changing commercial imperatives. The decisions of the higher courts are binding on lower courts, enhancing the predictability of the legal system.

Longstanding Reputation for Neutrality

New York is widely regarded as a neutral forum with independent, experienced, and neutral courts and arbitrators.

New York courts are neutral; whether the dispute involves U.S. and non-U.S. parties, or is entirely between non-U.S. parties, the New York courts do not favor a U.S. party over a non-U.S. party or one non-U.S. party over another when resolving actions to set aside an arbitral award or other issues arising out of arbitrations venued in New York:

  • Telenor Mobile Commc’ns AS v. Storm LLC, 524 F. Supp. 2d 332 (S.D.N.Y. 2007), aff’d, 584 F.3d 396 (2d Cir. 2009) (enforcing arbitration award in favor of Norwegian company against Ukrainian company).
  • China Nat’l Chartering Corp. v. Pactrans Air & Sea, Inc., No. 06 Civ. 13107 (LAK), 2009 WL 3805596 (S.D.N.Y. Nov. 13, 2009) (enforcing arbitral award in favor of Chinese entity).
  • R.J. Wilson & Assocs., Ltd. v. Underwriters at Lloyd’s London, No. Civ. A 08-0322 DRH, 2009 WL 3055292 (E.D.N.Y. Sept. 21, 2009) (granting U.K. defendant’s motion to compel arbitration against a U.S. corporation).
  • Steelex S.A. v. Dasil Corp., No. 07-CV2309 (RLM), 2007 WL 4373262 (E.D.N.Y. Dec. 10, 2007) (confirming arbitral award in favor of Swiss corporation against U.S. corporation).
  • J.K. Int’l, Pty., Ltd., v. Agriko S.A.S., No. 06-CV-13259 (KMK), 2007 WL 485435 (S.D.N.Y. Feb. 13, 2007) (vacating an order of maritime attachment against foreign party and staying the action in favor of arbitration in London, England).
  • Sojitz Corp. v. Prithvi Info. Solutions Ltd., 891 N.Y.S.2d 622 (N.Y. Sup. Ct. 2009) (granting order of attachment of account held by Indian company in favor of Japanese company).
  • Gabriel Capital L.P. v. Caib Investmentbank Aktiengesellschaft, 28 A.D. 3d 376 (1st Dep’t 2006) (finding that arbitration agreement was enforceable by Austrian entity against New York entity).

Similarly, in an arbitration sited in New York, the party-appointed arbitrators in a three-member tribunal will be neutral. The Code of Ethics for Arbitrators in Commercial Disputes promulgated jointly by the American Bar Association and the American Arbitration Association requires that all arbitrators, including party appointed arbitrators, must be neutral, unless all the parties agree otherwise in writing.

New York Courts Enforce Arbitration Agreements and Support the Arbitration Process When Called Upon

Although most international arbitrations do not require court intervention prior to the enforcement stage, New York courts support international arbitration at every stage from the enforcement of the arbitration agreement to the recognition of the arbitral award.

Courts will enforce an agreement to arbitrate when called upon to do so.

  1. New York courts have the authority to compel a party to arbitrate if it refuses to live up to its obligation to do so.
  2. Once New York courts have determined that parties have a valid agreement to arbitrate and that a dispute is arbitrable, they are obligated to stay or dismiss litigation brought in breach of the agreement to arbitrate.
  3. New York courts have the authority to issue anti-suit injunctions enjoining parties from pursuing litigation commenced outside of the United States in breach of an arbitration clause calling for arbitration in New York.

Examples of New York courts issuing anit-suit injunctions include:

  • Travelport Global Distrib. Sys. B.V. v. Bellview Airlines Ltd., No. 12 Civ. 3483(DLC), 2012 WL 3925856 (S.D.N.Y. Sept. 10, 2012) (issuing antisuit injunction where Nigerian Action would “create[] a serious risk of inconsistency and a race to judgment”)
  • Suchodolski Assocs., Inc. v. Cardell Financial Corp., No. 03 Civ.4148 WHP, 04 Civ. 5732 WHP, 2006 WL 10886, 3 (S.D.N.Y. Jan. 3, 2006), aff’d, 261 F. App’x 324, (2d Cir. 2008) (ordering Plaintiffs to withdraw the Brazilian Complaint insofar as it alleged breach of fiduciary duty which was covered by an arbitration clause between the parties).
  • Storm LLC v. Telenor Mobile Commc’ns AS, No. 06 Civ. 13157 (GEL), 2006 WL 3735657, at *8–*9 (S.D.N.Y. Dec. 15, 2006) (issuing anti-suit injunction reasoning the Ukrainian litigation was “designed to, and ha[d] had the effect of, interfering in the arbitration process” and thus was “conducted in the most vexatious way possible”).
  • Paramedics Electromedicina Comercial, Ltda v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645, 656 (2d Cir. 2004) (affirming grant of anti-suit injunction where parallel judgment might undermine the New York court’s judgment that the arbitration clauses were valid and the claims asserted were arbitrable).

New York courts will also assist with the arbitration process when called upon to do so.

  1. New York courts may be called upon to assist in the appointment of arbitrators if the arbitration agreement does not provide for a method of appointment of an arbitrator, if the agreed method fails or for any reason is not followed, or if an arbitrator fails to act and his or her successor has not been appointed.
  2. New York courts have the authority to grant preliminary injunctions in aid of arbitration not only before the arbitration panel is constituted, but also after the arbitration is commenced.
  3. New York courts have the authority to issue an attachment in aid of pending or prospective arbitrations if an “award to which the applicant may be entitled may be rendered ineffectual” without the attachment.