B. Right To Seek Stay

• Jurisdiction: New York

B. Right to Seek Stay

Effective service of the notice of intention or demand triggers the opposing party's right to seek a stay of the arbitration.⁷⁵ A special proceeding may be commenced to stay arbitration within 20 days of receipt of the notice or demand.⁷⁶ If an application to stay is not made within the 20-day period, then few objections can be raised to the validity or timeliness of the demand.⁷⁷ However, a petition to stay arbitration, filed after the 20-day limit, may still be granted if it is against public policy to permit the arbitration.⁷⁸ Service of the notice or demand on the opposing party's attorney does not impose this 20-day time bar on the party's right to seek a stay of arbitration.⁷⁹ A party who has not been served with notice or demand maintains his or her right to seek a stay of the arbitration provided he or she has not participated in the arbitration proceedings.⁸⁰ In no case can the parties agree to waive the right to apply for a stay of arbitration.⁸¹

If a party objects to the enforceability of the arbitration agreement, he or she must seek a stay of arbitration. Proceeding with arbitration will act as a waiver of threshold issues even if the party expressly tries to reserve his or her right to object on those grounds.⁸² However, minimal participation in arbitration that does not address the merits of the issue to be stayed, such as making a request to delay arbitration or choosing an arbitrator, does not necessarily constitute a waiver.⁸³

PRACTICE GUIDE

Always consult the agreement itself before serving notice of arbitration to ensure compliance with any requirements. Always serve notice on the party, and not solely on the party's attorney. Failure to seek a stay of arbitration within 20 days after notice will preclude any objections based on validity or timeliness of the notice.

An application to compel arbitration or notice of intention to arbitrate must be sent to all parties. If mailed, it must be sent by registered or certified mail. A response mailed within the 20-day period must also be sent by registered or certified mail.

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Notes:

^[75] Cf. Gurary v. Rendler , 40 Misc. 3d 1231(A), 975 N.Y.S.2d 709, *4 (Sup. Ct., Kings Co. 2013) ("The consequence of improper service under CPLR 7503(c) is to toll the time period by which the other party must apply to stay arbitration.").

^[76] Special proceedings in the Supreme Court and the County Court are commenced by filing the petition with the clerk of the county in which the proceeding is brought. CPLR 304. Actual service of process must be made within 15 days after the expiration of the statutory period for filing the notice of petition (or order to show cause) and the petition itself. CPLR 306-b. Because the 20-day time limit to apply for a stay is treated as a statute of limitations, State Farm Mut. Auto. Ins. Co. v. Maloney, 111 A.D.2d 917, 918, 490 N.Y.S.2d 815 (2d Dep't 1985), the period for service and filing proof thereof may effectively be 35 days after service of the demand for arbitration. See Am. Transit Ins. Co. v. Lewis, 157 Misc. 2d 730, 733, 602 N.Y.S.2d 1022 (Sup. Ct., N.Y. Co. 1993) (both the notice of petition and the underlying petition must be filed and served within the applicable time period; service of a notice of petition without more is not sufficient). One court has harmonized CPLR 306-b with CPLR 7503(c), holding that there is no jurisdictional defect where mail service of a notice of petition and the filing of proof of service is accomplished within the time frame authorized by CPLR 306-b. Nat'l Union Fire Ins. Co. v. Hugee, 173 Misc. 2d 619, 622–23, 661 N.Y.S.2d 744 (Sup. Ct., N.Y. Co. 1997); see also In re State Farm Mut. Ins. Auto. Co. (Riley), 47 Misc. 3d 1229(A), 17...