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New Commercial Division Rules Promote The Continued Use of ADR

In 1995, then Chief Judge Judith Kaye established the Commercial Division of the New York State Supreme Court as a forum to improve the efficiency with which commercial disputes were addressed by the courts and, at the same time, to enhance the quality of judicial treatment of those cases.

Over the past few years, the Commercial Division has continually revamped its rules in an effort to remain an efficient forum for the resolution of commercial disputes.

For that reason, we often recommend to clients that they seek to have commercial disputes resolved in the Commercial Division, and that they also specify New York as the choice of forum and New York law as the choice of law in their business agreements.

While the Commercial Division judges do an outstanding job at sorting through both the complex legal and factual issues they face, their case loads have grown over the years, and cases often lag because of the parties’ failure to consider grounds for resolution at the outset of a case and throughout the litigation process.

Recognizing those challenges, the Commercial Division recently enacted two new rules that continue its efforts to remain an efficient forum for resolving commercial matters.  Both of these rules go into effect on January 1, 2018.

The first rule, which amends Rule 10 of the Commercial Division, requires counsel to discuss alternative dispute resolution (ADR) with their clients before the preliminary conference and before each subsequent conference.

Rule 10, titled “Submission of Information,” specifies the information counsel must submit at conferences before the court.  The Rule 10 amendment, titled “Certification Relating to Alternative Dispute Resolution,” states in part that “counsel for each party shall also submit to the court at the preliminary conference and each subsequent compliance or status conference … a statement … certifying that counsel has discussed with the party the availability of alternative dispute resolution mechanisms … and stating whether the party is presently willing to pursue mediation at some point during the litigation.”

The second rule is an amendment to Rule 11 of the Commercial Division, which is titled “Discovery”.  Under the amendment, a preliminary conference order will now also give a date for identifying a mediator.  The amended Rule 11 language states in part that the preliminary conference order will “include[] in all cases in which the parties certify their willingness to pursue mediation pursuant to Rule 10, provision of a specific date by which a mediator shall be identified by the parties for assistance with resolution of the action.

These amendments continue the Commercial Division’s trend toward ADR, and getting parties to consider different ways to resolve issues in a case.  Commercial Division Rule 3, which is titled ” Alternative Dispute Resolution (ADR); Settlement Conference Before a Justice Other Than the Justice Assigned to the Case”, already allows the court to direct or the parties to seek, at any stage of the matter, an uncompensated mediator for the purpose of mediating a resolution of all or some of the issues presented in the litigation.  In addition, Rule 3 permits that counsel for all the parties may stipulate to having the case determined by a summary jury trial.  Finally, Rule 3 permits counsel to request a settlement conference before a judge other than the judge assigned to the case.

Collectively, these rules will help continue to make litigants discuss the possibility of settlement throughout the case, and encourage increased mediating of disputes by taking certain pressures off of litigants.  On occasion, some parties are reluctant to suggest mediation to their adversary out of a fear that it might show they lack confidence in their case or are desperate to settle.  By requiring the attorney to give the client the opportunity to suggest mediation and continuing to allow the court the ability to direct mediation, the Commercial Division rules force the issue of mediation to be put out in the open, which should lead to the more efficient resolution of disputes.