61 N.Y.2d 716 (1984)

When parties agree to arbitrate disputes under specific rules (e.g., AAA rules), arbitrator interpretation and application of those rules are generally not subject to judicial review unless a statutory requirement like CPLR 7506(b) is violated.

Summary

Bevona sought to confirm an arbitration award against Super Value Supermarkets. Super Value argued they didn’t receive proper notice per AAA rules and were denied due process. The Court of Appeals affirmed the lower court’s decision to confirm the award, holding that procedural compliance with AAA rules, when incorporated into the arbitration agreement, is a matter for the arbitrator, not the courts, to decide. The court distinguished this from failures to comply with statutory notice requirements, which are subject to judicial review.

Facts

The American Arbitration Association (AAA) sent Super Value Supermarkets a notice on August 26, 1981, that its dispute with Bevona would be arbitrated on October 2, 1981. The AAA sent reminder letters on September 25 and September 30, 1981. Super Value Supermarkets failed to appear at the hearing and did not request an adjournment or continuance.

Procedural History

Bevona sought to confirm the arbitration award. Super Value Supermarkets opposed, claiming inadequate notice and a denial of due process. The lower courts confirmed the award. The Court of Appeals reviewed the case.

Issue(s)

1. Whether a party’s claim of inadequate notice under AAA rules, incorporated into an arbitration agreement, is subject to judicial review.
2. Whether failure to comply with the notice requirements of CPLR 7506(b) is subject to judicial review.

Holding

1. No, because the interpretation and application of AAA rules is within the arbitrator’s purview when the parties’ agreement contains a broad arbitration provision.
2. Yes, because CPLR 7511(b)(1)(iv) authorizes judicial review of claims based on failure to comply with statutory notice requirements.

Court’s Reasoning

The Court reasoned that because the arbitration agreement contained a broad provision incorporating AAA rules, the arbitrator was empowered to interpret and apply those rules. “Inasmuch as this rule was incorporated by reference into the parties’ agreement via a broad provision providing for arbitration of all disputes and controversies, the question whether the rule was complied with is one for the arbitrators to decide and is not subject to review by this court.” The court distinguished this from cases where a party claims a violation of CPLR 7506(b), the statutory notice requirement for arbitration hearings. The court stated, “To be distinguished is the case where a party asserts a claim that the notice requirements of CPLR 7506 (subd [b]) were not satisfied. In such cases, the court is authorized to review the claim.” Because Super Value did not claim a violation of the *statutory* notice requirements, but rather the AAA rules, judicial review was not warranted.