New York Law Review

Tag: Nonsignatories

  • Hirschfeld Productions, Inc. v. Mirvish, 698 N.E.2d 1055 (N.Y. 1998): Arbitration Agreements Extend to Agents Acting on Behalf of Signatories

    Hirschfeld Productions, Inc. v. Mirvish, 698 N.E.2d 1055 (N.Y. 1998)

    Under the Federal Arbitration Act, agents of a signatory to an arbitration agreement can invoke the agreement’s protections when the alleged misconduct relates to their actions as officers, directors, or agents of the corporation, preventing circumvention of the agreement.

    Summary

    Hirschfeld Productions (HPI) sued Edwin and David Mirvish, officers of Mirvish Productions (MP), alleging tortious interference with contract and breach of fiduciary duty related to a failed theatrical production joint venture. The agreement between HPI and MP contained an arbitration clause. The Mirvishes, though nonsignatories, moved to compel arbitration. The New York Court of Appeals held that because the claims against the Mirvishes arose from their roles as agents of MP in relation to the agreement, they could enforce the arbitration clause, preventing circumvention of the agreement and effectuating the parties’ intent.

    Facts

    HPI and MP entered a joint venture to produce “Hair” at the Old Vic Theater in London. David Mirvish signed the agreement on behalf of MP. The agreement contained a clause requiring arbitration of disputes. The play closed quickly due to poor ticket sales. HPI sued Edwin and David Mirvish individually, alleging tortious interference with contract and breach of fiduciary duty.

    Procedural History

    The defendants moved to stay the action and compel arbitration. The Supreme Court denied the motion. The Appellate Division reversed, granting the motion to compel arbitration. The New York Court of Appeals affirmed the Appellate Division’s order.

    Issue(s)

    Whether an arbitration clause in a contract between a plaintiff and a corporation can be invoked by individual officers/agents of that corporation, who are not signatories to the contract, when the plaintiff’s claims relate to the officers’/agents’ conduct on behalf of the corporation.

    Holding

    Yes, because the Federal Arbitration Act and related federal law extend the benefit of arbitration agreements to agents acting on behalf of their principals, especially when the alleged misconduct relates to their behavior as officers or directors in their capacities as agents of the corporation.

    Court’s Reasoning

    The court reasoned that the dispute involved an international commercial contract, making it subject to the Federal Arbitration Act (9 U.S.C. § 201 et seq.) and federal law. Federal courts have consistently allowed agents to benefit from arbitration agreements entered into by their principals, provided the alleged misconduct relates to their roles as officers, directors, or agents. The court emphasized the importance of preventing parties from circumventing arbitration agreements by suing agents of the signatory party. Allowing agents to invoke arbitration effectuates the intent of the original parties to protect individuals acting on behalf of the principal in furtherance of the agreement. The court stated, “The rule is necessary not only to prevent circumvention of arbitration agreements but also to effectuate the intent of the signatory parties to protect individuals acting on behalf of the principal in furtherance of the agreement.” The Court found that HPI’s complaint focused on the Mirvishes’ conduct related to MP’s failure to effectively produce and promote the play, not their separate roles as owners of Enterprises. Therefore, the Mirvishes, as agents of MP, could enforce the arbitration agreement.