In a recent decision, the Appellate Division of the New Jersey Superior Court ruled that an arbitrator, having first mediated a dispute, could not subsequently resume the role of arbitrator.
Assuming such a dual role would require the written consent of all parties involved.
The Facts of the Case
The case, Minkowitz v. Israeli, involved the arbitration of financial and child custody issues as part of a New Jersey couple’s divorce proceedings. Barbara Minkowitz and Ron Israeli agreed to forgo judicial determination of all financial issues in favor of binding arbitration and agreed all custody and parenting time issues would be reviewed in non-binding arbitration. However, prior to the commencement of arbitration proceedings, the parties decided to engage in settlement discussions and mediation to narrow the issues for final determination. The parties ultimately executed four settlement agreements on a range of issues, including alimony, tax issues, and child support.
After a majority of the issues were resolved, Minkowitz retained new counsel who sought the release of the forensic accountant’s reports, which served as the basis for many of the agreements. When the accountant refused, Minkowitz moved for the release of the documents before the arbitrator. The Family Part judge denied the motions and ultimately confirmed the “arbitration awards” as final judgments. Among several arguments raised in appeal, Minkowitz maintained that the arbitrator’s orders must be set aside because the arbitrator exceeded his powers.
The Court’s Decision
The Appellate Division ultimately concluded that the settlement agreements were valid. However, all decisions entered by the arbitrator after he served as a mediator were not enforceable. As explained by the panel:
Mediation, although a form of Alternative Dispute Resolution, differs from binding arbitration…We conclude the differences in the roles of these two types of dispute resolution professionals necessitate that a mediator, who may become privy to party confidence in guiding disputants to a mediated resolution, cannot thereafter retain the appearance of a neutral fact finder necessary to conduct a binding arbitration proceeding. Consequently, absent the parties’ agreement, an arbitrator appointed under the [Uniform Arbitration Act] may not assume the role of mediator and, thereafter, resume the role of arbitrator.
The court also highlighted that once litigants elect to resolve their dispute through binding arbitration, they are locked into their decision. “If binding arbitration is selected as the forum for resolution disputes, a litigant cannot jump back and forth between the court and the arbitral forum. By its very nature, arbitration does not permit such a hybrid system….”
As this case highlights, the decision to engage in arbitration or mediation should not be taken lightly. The parties must fully understand how their decision may impact their legal rights and remedies going forward.
Key provisions in your contracts, including those relating to indemnification, insurance, and defense, are essential to contract risk management. While sometimes considered “boilerplate,” these provisions play a pivotal role when determining which party is responsible for certain costs and liabilities. They must always be negotiated and drafted carefully. Indemnification Clauses Businesses should never overlook the […]
Portability of estate and gift tax enables a surviving spouse to inherit any unused portion of their deceased spouse’s federal estate and gift tax exemption. So, if one spouse doesn’t utilize their full exemption, the surviving spouse can effectively double their exemption amount with regard to estate tax liability. For married couples, portability offers a […]
Pet Trusts in New Jersey and New York: A Practical Estate Planning Tool
For many of us, pets are more than companions—they are members of the family. Yet they are often overlooked or inadequately provided for when it comes to estate planning. A pet trust offers a legally enforceable way to ensure that your animal continues to receive proper care if you become incapacitated or pass away. As […]
For many New Jersey business owners, a closely held company represents decades of work, financial investment, and personal sacrifice. Trusts in business succession planning are one of the most effective tools for protecting that value, allowing founders to control how and when the business passes to the next generation while reducing the risk of disputes, […]
Read Before You Sign: IT Contract Pitfalls Every NJ Business Should Know
In today’s digital economy, New Jersey businesses of all sizes rely heavily on technology vendors, software providers, cloud platforms, and managed IT services. Whether your company is purchasing software, migrating data to the cloud, engaging a cybersecurity consultant, or entering into a long-term managed services agreement, a careful IT contract review can have significant operational, […]
Non-disclosure agreements (NDAs) remain a critical tool for protecting sensitive business information. However, New York NDA requirements have evolved, and businesses must ensure these agreements are carefully drafted to remain enforceable. In a competitive market like New York City, NDAs are commonly used to protect proprietary information, client relationships, and strategic plans. At the same […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
