By Gerald M. Levine, Esq., Levine Samuel, LLP
CPLR 7503(c) provides that "notice or demand [for arbitration] shall be served in the same manner as a summons or by registered or certified mail, return receipt requested." Plaintiff in Town of Amherst v. Granite State Ins. Co., Inc., 2015 NY Slip Op 05352 (4th Dept. 6-19-2015) argued that defendant's service of a demand for arbitration was defective because it was inconsistent with the statutory requirements. The motion court agreed; the appellate division reversed.
Two interesting points in the case. First, the parties had entered into a handwritten agreement in which they "agreed to litigate" a particular issue that plaintiff believed constituted a waiver of the Policy's arbitration clause. The court held that "Once the parties to a broad arbitration clause have made a valid choice of forum . . . all questions with respect to the validity and effect of subsequent documents purporting to work a modification or termination of the substantive provisions of their original agreement are to be resolved by the arbitrator."
The second point concerns service of the demand for arbitration. The court held that New York law was inapplicable. Defendant had served the demand by Federal Express, which the court in an earlier case, Matter of New Cent. Mut. Fire Ins. Co. V. Czumaj, 9 A.D.3d 833, 834 (2004) had held was defective because it was not one of the permitted methods of service.
However, in Town of Amherst the parties had expressly agreed to be bound by the procedural rules of the American Arbitration Association, which permits such service--Rule 39 then but currently Rule 43 under the Amended Commercial Arbitration Rules.
The agreement to be bound by the rules of the arbitral provider for serving notices had the result of superseding New York Law, citing Smith v. Positive Prods., 419 F.Supp 2d 437, 446 (SDNY 2005).