Matter of Perkins and Will Partnership v. Syska and Hennessy and Lehrer McGovern Bovis, 41 N.Y.2d 1045 (1977)

Whether a dispute is arbitrable depends on whether the parties agreed to arbitrate the particular dispute, and this determination is initially for the courts unless the agreement contains a broad arbitration clause.

Summary

This case addresses the question of whether a dispute between an architect and its structural and mechanical engineers should be submitted to arbitration. The agreements between the architect and the engineers contained specific clauses addressing disputes related to arbitration between the architect and the owner, but not a broad arbitration clause covering all disputes. The New York Court of Appeals held that the dispute was not subject to arbitration because the parties had not agreed to arbitrate this specific type of dispute, and the architect’s remedy was to involve the engineers in the ongoing arbitration between the owner and the architect.

Facts

Perkins and Will Partnership (the architect) entered into agreements with Syska and Hennessy (structural engineers) and Lehrer McGovern Bovis (mechanical engineers) for a project. The agreements contained a clause (Paragraph 15) specifying that any decision resulting from arbitration between the architect and the owner relating to the engineers’ services would be binding on the engineers, provided they had the opportunity to participate. The architect had an ongoing arbitration with the owner and sought to compel the engineers to arbitrate their dispute as well.

Procedural History

The lower courts considered whether the dispute between the architect and the engineers was subject to arbitration based on the agreements. The Appellate Division determined that the engineers had not agreed to submit this specific dispute to arbitration. The Court of Appeals affirmed the Appellate Division’s order.

Issue(s)

Whether the dispute between the architect and the engineers is subject to arbitration, or whether the architect’s exclusive remedy is to “vouch in” the engineers in the ongoing arbitration between the owner and the architect.

Holding

No, because the agreements between the architect and the engineers did not contain a broad arbitration clause calling for the arbitration of all disputes, and Paragraph 15 of each agreement specifically covered disputes of the type presently at issue by providing that “[a]ny decision or determination resulting from arbitration between the Architect and the Owner which relates to the Consultant’s services shall be binding upon the Consultant, provided that the Consultant has been afforded the opportunity to participate in the arbitration.”

Court’s Reasoning

The Court of Appeals emphasized that the determination of whether a dispute is arbitrable rests on whether the parties agreed to arbitrate the specific dispute. The court cited Nationwide Gen. Ins. Co. v. Investors Ins. Co. of Amer., 37 N.Y.2d 91, 95 (1975), stating, “[G]enerally it is for the courts to make the initial determination as to whether the dispute is arbitrable, that is ‘whether the parties have agreed to arbitrate the particular dispute’” (quoting Steelworkers v. American Mfg. Co., 363 U.S. 564, 570-571). In this case, the agreements between the architect and the engineers contained specific clauses regarding disputes related to arbitration between the architect and owner (Paragraph 15). The absence of a broad arbitration clause meant that the court, not an arbitrator, should decide arbitrability. Because the parties had addressed the matter in their agreements, the court found that the architect’s exclusive remedy was to vouch in the engineers in the ongoing arbitration with the owner. The court concluded that the Appellate Division was correct in its determination that the respondents had not agreed to submit this dispute to arbitration.