United States: New Accelerated Adjudication Option Goes Into Effect Today

Effective today, there is a new Commercial Division, New York State Supreme Court rule that will permit parties, in a dispute exceeding $500,000, to "accelerate" adjudication.

No promises can be made yet that this new rule will materially expedite litigation.  However, it does provide an alternative to arbitration clauses and places certain meaningful restrictions on litigants.  As such, there are numerous strategic advantages and disadvantages which need to be carefully considered before adding an accelerated adjudication provision into a contract.

The Introduction of Accelerated Adjudication
Through this rule — Rule 9 of the Rules of Practice for the Commercial Division (22 NYCRR § 202.70) — parties may agree to an expedited lawsuit in the Commercial Division by including a contract provision in which both parties agree to submit to that court's exclusive jurisdiction and accelerated procedures.  Indeed, the Rule includes a form provision that parties can incorporate into commercial contracts (though parties are free to use alternative language):

Subject to the requirements for a case to be heard in the Commercial Division, the parties agree to submit to the exclusive jurisdiction of the Commercial Division, New York State Supreme Court, and to the application of the Court's accelerated procedures, in connection with any dispute, claim or controversy arising out of or relating to this agreement, or the breach, termination, enforcement or validity thereof.

Opting for this accelerated adjudication means, in short, streamlined pre-trial proceedings.  More specifically, pursuant to Rule 9, parties must be "trial-ready" within nine months of the request for judicial intervention.

To expedite the proceedings, parties invoking Rule 9 will be subject to certain limitations on discovery (though parties can negotiate around these limitations).  As set forth in the following table, these limitations are not stringent with respect to document discovery, but place real limits on other forms of disclosure and provide the opportunity for challenging disproportionately expensive electronic discovery:

Interrogatories No more than seven per party.
Requests to Admit (rarely used) No more than five per party.
Depositions No more than seven per party, each for a maximum of seven hours.
Document Discovery No concrete limitations

Limited to documents "relevant to claim or defense" and "restricted in terms of time frame, subject matter and persons or entities."
E-Discovery No concrete limitations, although certain efforts to manage costs and burden.

Most notably, the court can deny requests for e-discovery or require the requesting party to advance costs "where costs and burdens of e-discovery are disproportionate to the nature of the dispute or the amount in controversy."

In addition, choosing this expedited procedure will result in the waiver of certain material defenses and rights of a litigant that are perceived to prolong litigation:

  • Trial by jury;
  • Punitive and exemplary damages;
  • Interlocutory appeals; and
  • Objections based on personal jurisdiction or forum non conveniens.

Potential Implications & Strategic Considerations

Only time will tell how accelerated the accelerated adjudication turns out to be as questions abound as this pre-inception stage.  What are the consequences if actions are not trial-ready in nine months? Once trial-ready, will judges fast-track the trial or will parties still wait many months to be heard? Will the judges in the Commercial Division genuinely approach these cases differently than the regularly-calendared docket?

Moreover, electing this option has real consequences (e.g., waiving jury trial and interlocutory appeals) that need to be carefully considered before adopting an accelerated adjudication contract clause. From a strategic perspective, there are certain clear advantages and disadvantages to incorporating Rule 9 into a contract.  For example:

  • For parties contracting with international or out-of-state parties, the waiver of personal jurisdiction and challenges to the forum can avoid a major hurdle to litigation.
  • For institutional parties accustomed to unfavorable imbalances in the burdens of discovery, the potential for cost-shifting e-discovery, as well as limitations on depositions and other discovery devices, can offer significant protection.
  • For parties anticipating straightforward claims (e.g., lenders vis-à-vis defaulting borrowers), this provision should provide some security against counsel who use delay tactics and motion practice as the primary weapon.
  • For foreign parties who are wary of the jury system and unlimited discovery, the waiver of a right to jury trial and the limitations on discovery might be compelling.

Accelerated Adjudication Clause or Arbitration Clause?

Accelerated adjudication will hopefully provide parties to commercial transactions the opportunity to limit the scope of potential litigation from the inception of the relationship.  Thus parties can contractually agree to place restrictions on litigation rather than use arbitration clauses or other alternative dispute resolution mechanisms.

Specific reasons to consider using an accelerated adjudication clause over an arbitration clause include:

  • A "middle ground": In theory, this option allows for the best of both worlds — relatively expedited relief backed by the weight of the court.
  • An enforceable judgment: To enforce arbitration awards, prevailing parties need to go through the judicial system anyway.  This shaves off that extra layer of process.
  • Appellate review: The right to appellate review is preserved (albeit with a waiver of interlocutory appeal).  Arbitration awards — which often lack transparency and do not set forth the basis for the decision reached — can only be overturned in extraordinary circumstances and not for mere mistakes of fact or law.
  • Real discovery: The right to discovery is streamlined, but not as diminished as in most (but, not all) arbitrations.  For example, depositions are critical to litigation, but are not often not a part of the arbitration process.

In contrast, arbitration still offers benefits that this new judicial mechanism cannot provide, including:

  • Time: Though arbitration frequently lasts longer than expected, this "accelerated adjudication" route is still likely to extend beyond that of the standard arbitration. 
  • Confidentiality:  Litigation is immediately public, especially now that court documents are almost all electronically filed.  Confidentiality can still be preserved in arbitration where there is no public record or open court, and where parties can contractually agree to maintain the disputes in confidence.
  • Costs:  Absent motion practice and broad discovery, arbitration provides an opportunity to avoid some of the biggest cost pitfalls of litigation (especially where the parties are only paying for one arbitrator and not for a full panel).
  • The ability to craft:  With arbitration clauses, parties can craft their own process that can supersede or complement the default rules of the arbitration institutions.  This freedom can provide additional protections, especially in situations where one party has negotiating leverage and can create a provision tailored to its own concerns..

****

Only time will tell whether the new accelerated adjudication option will have a material impact on the duration of litigation.  However, this option may appeal to those that seek to avoid the morass of unlimited discovery and motion practice, but feel more comfortable and protected in a court of law than in an alternative forum.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions