A Brooklyn judge has thrown out a rabbinical court's arbitration award, finding that the court's refusal to allow the claimant to select his own counsel violated New York law, notwithstanding the fact that the claimant participated in the proceeding without objection.
The decision constitutes the first time a New York court has addressed in a written opinion the issue of whether an arbitration panel can require that attorneys appearing before them must receive their approval.
It is also a rare reversal of an arbitration award, in which even mistakes of fact and misapplications of the law are insufficient grounds for reversal.
Here, Brooklyn Supreme Court Justice Martin Schneier ruled that the rabbinical tribunal's disqualification without explanation of plaintiff Joseph Kahan's attorney, coupled with the panel's insistence on designating Kahan's counsel, violated the CPLR's arbitration procedural requirements.
"A party's entitlement to be represented in an ongoing litigation proceeding by counsel of his own choosing is a valued constitutional right which should not be abridged absent a clear showing that disqualification is warranted," Schneier wrote in Kahan v. Rosner, 2808/09.
"In the instant case, the Rabbinical Court gave no reason for denying petitioner's choice of [counsel] to represent him in the arbitration proceedings and thereby violated the petitioner's right to his choice of counsel. Moreover, the choice of counsel is necessary to give effect to the non-waivable right contained in CPLR §7506."
The underlying action involved a dispute between Kahan and about a half dozen of his siblings and in-laws over two pieces of property in Williamsburg, Brooklyn, formerly owned by Kahan's late father.
In 2007, the two sides entered into a written agreement to try their case before a rabbinical court or beth din. The rabbinical courts, which apply halacha (Jewish law), commonly adjudicate divorces and business disputes between Orthodox Jews.
The agreement between Kahan and his various family members stated in part, "We also accepted upon ourselves to bring along only such Rabbinical counsel who is acceptable to the Rabbinical Court."
The tribunal rejected Kahan's choice of counsel, Sheldon Eisenberger, notwithstanding that Eisenberger had more than 20 years of experience appearing before rabbinical courts.
The panel "wanted to select an attorney who would represent me, and I refused to agree to that," Kahan alleged in his complaint.
The arbitration nonetheless proceeded, without objection by Kahan. The panel sided with Kahan's siblings and in-laws, requiring them to pay Kahan only $14,295 to settle his claim.
Kahan then filed the present action, seeking to vacate the panel's award.
The respondents contested the motion, arguing among other things that because Kahan participated in the proceedings without objection, he cannot now attack a resolution he does not like.
'CRITICAL ISSUE'
In a decision handed down last week, Schneier sided with Kahan and issued the rare reversal of an arbitration award.
The judge found that the tribunal's rejection of Kahan's counsel violated his right to choose his own counsel, as well as CPLR §7506(d), which states that the right to representation at arbitration may not be waived.
"The critical issue is whether the arbitration proceedings leading up to the award complied with New York law," Schneier wrote. "This Rabbinical Court's arbitration proceedings did not comply with CPLR §7506(d) and must, therefore, be vacated."
Donald A. Derfner and David P. Gillett of Derfner & Gillett represented Kahan's siblings and in-laws.
Derfner said that although there are no previous written opinions on the issue, the matter has been litigated numerous times. Derfner said his clients are considering an appeal.
"It's an important issue because it would affect beth dins and other alternative dispute resolution procedures, which are becoming more and more common," Derfner said.
Derfner added that many industry and religious groups have their own tribunals, which like the beth dins have their own rules. Requiring representatives who are familiar with those rules, Derfner said, benefits everyone.
"The analogy is, if [an attorney] wants to come into the Southern District of New York, that attorney has to either be admitted to the bar or has to be admitted pro hac vice," Derfner said. "You can't just let them in."
Scott E. Mollen, Paul Rubin and Laura Halbreich represented Kahan.
Mollen said that Schneier's decision recognized that the judicial interest in upholding arbitration awards does not trump constitutional rights.
"The broad ramification [of this decision] is that even in a religious arbitration, certain minimal due process rights must be recognized," Mollen said. "When you agree to a private arbitration you are not agreeing to be stripped of your constitutional rights."
