Tag Archives for arbitration

Agreements To Arbitrate In Bais Din: Get It In Writing!

A recent decision from a New York State Supreme Court illustrates the importance of following proper procedure when arbitrating in Bais Din. In that case, a homeowner’s insurance company sued a Bais Yaakov school, alleging that work done to expand the school building had damaged their insured’s property, requiring the insurance company to pay substantial claims to its insured.

According to the facts in the decision:

Beth Jacob began construction to expand its building at 98-100 Lawrence Street, Brooklyn, New York, in late March or early April 2006. In mid-October 2006 Rabbi Michael Levi (Levi) was served with a summons to appear on behalf of Beth Jacob at the Beis Din Zedek Rabbinical Court of the Central Rabbinical Congress of the United States and Canada (Beis Din). The proceeding was initiated by Rabbi Aharon Zaberman and Eli Baumwolspiner. According to Beth Jacob, the parties appeared before the Beis Din on October 22, 2006. Levi asserts, in his affidavit, that Eli Baumwolspiner, Zaberman, and Levi signed an agreement to have the case heard by the Beis Din, after which the three-member panel of the Beis Din heard the parties’ arguments. While Levi contends that the Beis Din did not require Beth Jacob to pay any money to Baumwolspiner, and permitted the construction to continue, there are no documents submitted on this motion regarding the parties’ agreement to arbitrate, or the Beis Din’s determination. The Baumwolspiner’s maintain that they merely sought the Beis Din’s assistance in preventing further damage, but did not submit the issue of payment for the damages to the Beis Din for consideration.

The property owner’s insurance company, Tower Insurance, paid its insured for the damage and then sued the Bais Yaakov. The school argued that the court should “compel arbitration (in the Beis Din) on the ground that plaintiff’s subrogors are bound by their agreement to arbitrate, and Tower stands in their shoes.”

The insurance company argued that there was no agreement or contract binding the parties to adjudicate their claims before Bais Din.  The court agreed, noting that:

Beth Jacob has produced no written agreement to arbitrate, either from prior to the parties’ appearance at the Beis Din, or dating from that appearance. An agreement to arbitrate must be in writing in order to be enforced. CPLR 7501. Furthermore, that writing must make it clear what issues are to be arbitrated, and make the parties’ intention to arbitrate the dispute unequivocal.

The upshot is that parties who are in Bais Din should be certain that the agreement to arbitrate, as well as the scope of the arbitration, are well documented. To protect their authority, Batai Dinim should not proceed with a hearing unless and until all parties enter in such written agreements.

Heter Iska arbitration rights forfeited by defendant’s participation in litigation

The Appellate Division, Second Department affirmed a decision of the lower court that denied defendant Eli Weinstein’s motion to compel arbitration. The parties had signed a Heter Iska that contained an arbitration clause. (Although not mentioned in the decision, presumably it required the parties to go to Bais Din).

1 1/2 years after the litigation started, Weinstein, the defendant in the case, moved to compel arbitration based on the Heter Iska. He claimed that “he had not retained a copy of the Iska Contract and had ‘completely forgotten that it contained an arbitration provision.’”

The court held that a “defendant in an action who has the right to arbitrate a claim may forfeit or waive that right by acts inconsistent with the intention to arbitrate,” and found that “under these circumstances, Weinstein’s conduct evinced an intent over an extended period of time to litigate, rather than to arbitrate… Accordingly, the Supreme Court properly denied Weinstein’s motion to compel arbitration and stay the actions.”

The decision can be found here.

Neither court indicated that there was anything wrong with the Heter Iska or the arbitration clause. Rather, the decision was based on Weinstein’s failure to timely assert his right to arbitrate by first litigating for 1 1/2 years.

The decision also does not indicate how Weinstein “refreshed his recollection” of the arbitration clause since he claimed he did not keep a copy of the Heter Iska. A copy may have been produced by his adversaries in the course of discovery. If that was the case, and if Weinstein moved to compel arbitration as soon as he was reminded of the clause, than the court’s decision may be incorrect. As noted in the decision, the reason that a party may be found to have waived the right to arbitrate is to prevent a defendant from using the courtroom “as a convenient vestibule to the arbitration hall so as to allow a party to create his own unique structure combining litigation and arbitration.” If that was clearly not Weinstein’s intent, then maybe he didn’t waive or forfeit his right to arbitrate at all.