As the retreat from long-running and expensive court proceedings has become more like a stampede, courts have become increasingly favorably disposed to facilitating out-of-court resolutions of disputes. This has generally led, among other things, to enlarging the powers of arbitrators, with many decisions holding that they can grant forms of relief that courts cannot. However, a recent New York court decision in Grynberg v. BP Exploration Operating, has taken a significant turn in the opposite direction.
In Grynberg, the Appellate Division, First Department, by way of a short slip opinion [92 AD 3d 547 (Feb. 21, 2012)], affirmed a holding by Supreme Court Justice Jane Solomon (No. 116840, slip op. 33401(U), Sup. Ct. N.Y. Co., Dec. 8, 2010), that arbitrators do not have the power to award sanctions under New York law. The holding is particularly surprising because both the relevant facts as set forth below,1 as well as the law, seem to clearly point the other way.
